What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-07-07 compared with 2021-04-07 · 90 added, 107 removed, 255 unchanged (44% of the section changed)

3 unchanged sentences

in thousands of US dollars

February 28, 2021

November 30, 2020

4 unchanged sentences

Investment in Ambler Metals LLC (note 4)

Fixed assets (note 5)

Right of use asset (note 6 (a))

14 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

3 unchanged sentences

For the three months ended

February 28, 2021

February 29, 2020

Foreign exchange loss

For the six months ended

Feasibility study (note 4(a))

Foreign exchange loss (gain)

General and administrative

Investor relations

Mineral properties expense (note 4(a))

Mineral properties expense

Professional fees

1 unchanged sentence

Total expenses

Gain on derecognition of assets contributed to joint venture (note 4(a))

Share of loss on equity investment (note 4(b))

1 unchanged sentence

Services agreement income (note 4(e))

Comprehensive (loss) earnings for the year

Gain on derecognition of assets contributed to joint venture (note 4(a))

Comprehensive (loss) earnings for the period

Basic (loss) earnings per common share

4 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

8 unchanged sentences

Stock-based compensation

Loss for the period

Earnings for the period

Balance – February 29, 2020

Exercise of options

Restricted Share Units

Stock-based compensation

Loss for the period

Balance – May 31, 2020

Balance – November 30, 2020

3 unchanged sentences

Balance – February 28, 2021

Exercise of options

Stock-based compensation

Loss for the period

Balance – May 31, 2021

(See accompanying notes to the interim consolidated financial statements)

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

1 unchanged sentence

in thousands of US dollars

For the three months ended

February 28, 2021

February 29, 2020

For the six months ended

Cash flows used in operating activities

1 unchanged sentence

Adjustments to reconcile net loss to cash flows in operating activities

Right of use asset amortization and lease accretion

Office lease payments

Office lease accounting

Loss on working capital written-off upon joint venture formation

7 unchanged sentences

(Decrease) in accounts payable and accrued liabilities

Cash flows from financing activities

Proceeds from exercise of options

Decrease in cash from operating activities

Effect of exchange rate on cash and cash equivalents

Cash and cash equivalents – beginning of period

Cash and cash equivalents – beginning of year

Cash and cash equivalents – end of the period

1 unchanged sentence

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

13 unchanged sentences

References to CAD$ refer to amounts in Canadian dollars.

The unaudited interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position as of February 28, 2021 and our results of operations and cash flows for the three months ended February 28, 2021 and February 29, 2020.

The results of operations for the three months ended February 28, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2021.

The unaudited interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position as of May 31, 2021 and our results of operations and cash flows for the six months ended May 31, 2021 and May 31, 2020.

The results of operations for the six months ended May 31, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2021.

As these interim consolidated financial statements do not contain all of the disclosures required by U.S.

1 unchanged sentence

Securities and Exchange Commission (“SEC”) and Canadian securities regulatory authorities on February 12, 2021.

These interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on April 6, 2021.

These interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on July 6, 2021.

3) Accounts receivable

in thousands of dollars

February 28, 2021

November 30, 2020

2 unchanged sentences

Accounts receivable

The balance due from Ambler Metals LLC (see note 4 below) consists of services rendered by Trilogy and reimbursements for invoices paid by Trilogy on behalf of Ambler Metals LLC per a service agreement.

The balance was paid in full by Ambler Metals LLC subsequent to the quarter end.

The balance due from Ambler Metals LLC (see note 4 below) consisted of services rendered by Trilogy and reimbursements for invoices paid by Trilogy on behalf of Ambler Metals LLC per a service agreement.

4) Equity method investment

1 unchanged sentence

On February 11, 2020, the Company completed the formation of a 50/50 joint venture named Ambler Metals LLC 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 US$ 145 million, resulting in each

To assist Ambler Metals during the initial set up

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

party’s subsidiaries directly owning a 50 % interest in Ambler Metals LLC.

To assist Ambler Metals during the initial set up phase, Trilogy was paying all of Ambler Metals LLC’s invoices and being reimbursed pursuant to a services agreement (the “Services Agreement”) between Trilogy and Ambler Metals LLC until the back office was fully transitioned to a new permanent team employed by the joint venture.

phase, Trilogy was paying all of Ambler Metals LLC’s invoices and being reimbursed pursuant to a services agreement (the “Services Agreement”) between Trilogy and Ambler Metals LLC until the back office was fully transitioned to a new permanent team employed by the joint venture.

The Services Agreement ended on December 31, 2020.

5 unchanged sentences

Our investment in Ambler Metals LLC was initially measured at its fair value of $ 176 million upon recognition.

Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals LLC, which, as at February 28, 2021, totaled $ 172 million.

The following table summarizes the gain on recognition of the UKMP assets upon transfer to the Ambler Metals LLC joint venture on February 11, 2020.

Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals LLC, which, as at May 31, 2021, totaled $ 170 million.

The following table summarizes the gain on derecognition of the UKMP assets upon transfer to the Ambler Metals LLC joint venture on February 11, 2020.

in thousands of dollars

11 unchanged sentences

No additional mineral properties expenses were incurred subsequent to February 11, 2020 as upon the formation of the joint venture with South 32, all mineral properties previously held by the Company were contributed to Ambler Metals LLC.

Prior to the formation of the joint venture, the Company had also incurred $ 0.7 million in Arctic Project feasibility costs that are included in the mineral properties expense balance of $ 1.5 million for the three-month period ended February 29, 2020.

Carrying value of equity method investment

During the three-month period ending February 28, 2021, Trilogy recognized, based on its 50 % ownership interest in Ambler Metals LLC, an equity loss equivalent to its pro rata share of Ambler Metals LLC's comprehensive loss of $ 2.2 million for the three month period ending February 28, 2021.

The carrying value of Trilogy’s 50 % investment in Ambler Metals LLC as at February 28, 2021 is summarized on the following table.

Trilogy recognized, based on its 50 % ownership interest in Ambler Metals LLC, an equity loss equivalent to its pro rata share of Ambler Metals LLC's comprehensive loss of $ 3.4 million for the three-month period ending May 31, 2021 (2020 - $ 1.1 million) and $ 5.6 million for the six-month period ending May 31, 2021 (2020 - $ 1.5 million).

The carrying value of Trilogy’s 50 % investment in Ambler Metals LLC as at May 31, 2021 is summarized on the following table.

in thousands of dollars

November 30, 2020, investment in Ambler Metals LLC

Share of loss on equity investment for the three month period ending February 28, 2021

February 28, 2021, investment in Ambler Metals LLC.

Share of loss on equity investment for the six-month period ending May 31, 2021

May 31, 2021, investment in Ambler Metals LLC

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

The following table summarizes Ambler Metals LLC's Balance Sheet as at February 28, 2021.

The following table summarizes Ambler Metals LLC's Balance Sheet as at May 31, 2021.

in thousands of dollars

February 28, 2021

November 30, 2020

8 unchanged sentences

Lease obligation

The following table summarizes Ambler Metals LLC's comprehensive loss for the three-month period ending February 28, 2021.

The following table summarizes Ambler Metals LLC's comprehensive loss for the three and six-month period ending May 31, 2021.

in thousands of dollars

Period ending

February 28, 2021

February 29, 2020

Three months ending

Six months ending

Mineral properties expense

5 unchanged sentences

In addition, the Company received payments of $ 4,053 related to operating expenses paid on behalf of Ambler Metals during the three-month period ending February 28, 2021.

5) Fixed assets

in thousands of dollars

February 28, 2021

British Columbia, Canada

Furniture and equipment

Leasehold improvements

Computer hardware and software

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

in thousands of dollars

November 30, 2020

British Columbia, Canada

Furniture and equipment

Leasehold improvements

Computer hardware and software

There were no services provided to Ambler Metals during the three-month period ended May 31, 2021.

5) Accounts payable and accrued liabilities

in thousands of dollars

February 28, 2021

November 30, 2020

3 unchanged sentences

Accounts payable and accrued liabilities

Trilogy Metals Inc.

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

(a) Right-of-use asset

1 unchanged sentence

ASC transition as at December 1, 2019

Lease accretion

Net amortization

Derecognition of Fairbanks warehouse lease

Balance as at November 30, 2020

Lease accretion

Balance as at February 28, 2021

Net amortization

Balance as at May 31, 2021

(b) Lease liabilities

3 unchanged sentences

in thousands of dollars

Three months ended

February 28, 2021

February 29, 2020

Six months ended

Operating lease costs

1 unchanged sentence

Total lease expense

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

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 February, 28, 2021, the weighted-average remaining lease term was 3.3 years and the weighted-average discount rate is 8 % .

As of May 31, 2021, the weighted-average remaining lease term is 3 years and the weighted-average discount rate is 8 % .

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 three months ended February 28, 2021 are as follows:

Supplemental cash and non-cash information relating to our leases during the six months ended May 31, 2021 are as follows:

● Cash paid for amounts included in the measurement of lease liabilities was $ 98,359 .

Future minimum payments relating to the lease recognized in our balance sheet as of February 28, 2021 are as follows:

Trilogy Metals Inc.

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

Future minimum payments relating to the lease recognized in our balance sheet as of May 31, 2021 are as follows:

in thousands of dollars

February 28, 2021

Total undiscounted lease payments

11 unchanged sentences

Exercise of options

February 28, 2021, issued and outstanding

May 31, 2021, issued and outstanding

Stock options

During the three-month period ended February 28, 2021, the Company granted 3,374,150 options (2020 - 2,050,000 options) at a weighted-average exercise price of CAD$ 2.52 (2020 - CAD$ 3.02 ) 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.

During the six-month period ended May 31, 2021, the Company granted 3,374,150 options (2020 - 2,325,000 options) at a weighted-average exercise price of CAD$ 2.52 (2020 - CAD$ 2.93 ) 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 weighted-average fair value attributable to options granted in the period was $ 0.84 (2020 - $ 0.96 ).

For the three-month period ended February 28, 2021, Trilogy recognized a stock-based compensation charge of $ 2.10 million (2019 – $ 1.16 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

For the six-month period ended May 31, 2021, Trilogy recognized a stock-based compensation charge of $ 2.60 million (2020 – $ 1.58 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

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

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

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

Assumptions used in the pricing model for the three-month period ended February 28, 2021 are as provided below.

February 28, 2021

Assumptions used in the pricing model for the six-month period ended May 31, 2021 are as provided below.

Risk-free interest rates

3 unchanged sentences

Expected dividends

As of February 28, 2021, there were 3,374,150 non-vested options outstanding with a weighted average exercise price of $ 2.07 ;

As of May 31, 2021, there were 3,176,337 non-vested options outstanding with a weighted average exercise price of CAD$ 2.63 ;

the non-vested stock option expense not yet recognized was $ 1.17 million.

This expense is expected to be recognized over the next two years .

A summary of the Company’s stock option plan and changes during the three-month period ended February 28, 2021 is as follows:

February 28, 2021

A summary of the Company’s stock option plan and changes during the six-month period ended May 31, 2021 is as follows:

Weighted average

1 unchanged sentence

Number of options

Balance – beginning of the period

Balance – beginning of the year

Balance – end of the period

The following table summarizes information about the stock options outstanding at February 28, 2021.

The following table summarizes information about the stock options outstanding at May 31, 2021.

average years

1 unchanged sentence

exercise price

Range of price

Range of exercise price

$ 0.58 to $ 1.00

3 unchanged sentences

$ 2.51 to $ 3.00

The aggregate intrinsic value of vested share options (the market value less the exercise price) at February 28, 2021 was $ 3.3 million (2020 - $ 5.9 million) and the aggregate intrinsic value of exercised options for the three months ended February 28, 2021 was $ 0.17 million (2020 - $ 0.04 million).

The aggregate intrinsic value of vested share options (the market value less the exercise price) at May 31, 2021 was $ 6.8 million (2020 - $ 8.3 million) and the aggregate intrinsic value of exercised options for the six months ended May 31, 2021 was $ 0.71 million (2020 - $ 0.18 million).

Restricted Share Units and Deferred Share Units

The Company has a Restricted Share Unit Plan (“RSU Plan”) and a Non-Executive Director Deferred Share Unit Plan (“DSU Plan”) to provide long-term incentives to employees, officers and directors.

Awards under the RSU Plan and DSU Plan

Awards under the RSU Plan and DSU Plan may be settled in cash and/or common shares of the Company at the Company’s election with each restricted share unit

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

may be settled in cash and/or common shares of the Company at the Company’s election with each restricted share unit (“RSU”) and deferred share unit (“DSU”) entitling the holder to receive one common share of the Company or equivalent value.

(“RSU”) and deferred share unit (“DSU”) entitling the holder to receive one common share of the Company or equivalent value.

All units are accounted for as equity-settled awards.

A summary of the Company’s unit plans and changes during the three-month period ended February 28, 2021 is as follows:

A summary of the Company’s unit plans and changes during the six-month period ended May 31, 2021 is as follows:

Number of DSUs

Balance – beginning of the period

Balance – beginning of the year

Balance – end of the period

For the three-month period ended February 28, 2021, Trilogy recognized a stock-based compensation charge of $ 0.04 million (2020- $ 0.04 million), net of estimated forfeitures.

The Company did not issue any RSU grants during the three-month period ended February 28, 2021.

As of February 28, 2021, there were no outstanding RSU grants.

For the six-month period ended May 31, 2021, Trilogy recognized a stock-based compensation charge of $ 0.07 million (2020- $ 0.39 million), net of estimated forfeitures.

The Company did not issue any RSU grants during the six-month period ended May 31, 2021.

As of May 31, 2021, there were no outstanding RSU grants.

8) Financial instruments

9 unchanged sentences

The Company operates in the United States and Canada.

The Company’s exposure to currency risk at February 28, 2021 is limited to the Canadian dollar balances consisting of cash of approximately CDN$ 78,000 , accounts receivable of approximately CDN$ 29,000 and accounts payable of approximately CDN$ 413,000 .

The Company’s exposure to currency risk at May 31, 2021 is limited to the Canadian dollar balances consisting of cash of approximately CAD$ 123,000 , accounts receivable of approximately CAD$ 24,000 and accounts payable of approximately CAD$ 248,000 .

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 $ 8,000 .

3 unchanged sentences

The Company’s exposure to credit risk is equal to the balance of cash and cash equivalents and accounts receivable as recorded in the financial statements.

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

Liquidity risk

2 unchanged sentences

therefore, the Company manages liquidity risk through the management of its capital structure and financial leverage.

Contractually obligated cash flow requirements as at February 28, 2021 are as follows:

Trilogy Metals Inc.

For the Quarter Ended May 31, 2021

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

Contractually obligated undiscounted cash flow requirements as at May 31, 2021 are as follows:

in thousands of dollars

3 unchanged sentences

The Company is exposed to interest rate risk with respect to interest earned on cash and cash equivalents.

Based on balances as at February 28, 2021, a 1 % change in interest rates would result in a $200 change in net loss, assuming all other variables remain constant.

Based on balances as at May 31, 2021, a 1 % change in interest rates would result in a $ 200 change in net loss, assuming all other variables remain constant.

9) Commitment

1 unchanged sentence

Trilogy Metals Inc.

For the Quarter Ended February 28, 2021

For the Quarter Ended May 31, 2021

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-Q

Item 1. Financial Statements