What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-11 compared with 2021-02-12 · 151 added, 148 removed, 493 unchanged (38% of the section changed)

25 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Trilogy Metals Inc.

Opinions on the Financial Statements

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Trilogy Metals Inc.

1 unchanged sentence

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2021 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

11 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

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.

Assessment of impairment indicators related to the Investment in Ambler Metals LLC

As described in Notes 2 and 4 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, 2021, the carrying amount of the Company’s investment in Ambler was $160.1 million.

Management assesses impairment indicators whenever changes in facts and circumstances indicate there is an other than temporary loss in value of the investment.

Management applies judgment in assessing whether facts and circumstances indicate an other than temporary loss in value has occurred that could give rise to the requirement to conduct an impairment test.

Factors such as (i) sustained losses by the investment, (ii) an absence of the ability to recover the carrying amount of the investment, and (iii) deterioration of market conditions, are evaluated by management in determining whether there are any indicators of impairment.

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

(i) an absence of the ability to recover the investment in Ambler, and (ii) a deterioration of market conditions.

This in turn led to a high degree of auditor judgment and subjectivity in performing procedures to evaluate audit evidence relating to the judgements made by management in their assessment of 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, evaluating the reasonableness of management’s assessment of indicators of impairment 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 changes in Trilogy Metals market capitalization, and (ii) evaluating whether there was a deterioration of market conditions 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, 2021.

Performing an audit of the financial statements of Ambler as of November 30, 2021 included (i) evaluating whether there were significant adverse changes in the business climate including significant decreases in copper, zinc, and other metal prices (ii) evaluating whether there were significant adverse changes in legal factors with respect to mineral property title matters, and (iii) evaluating whether there was an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of Ambler’s mineral properties.

/s/ PricewaterhouseCoopers LLP

15 unchanged sentences

Fixed assets (note 5)

Mineral properties and development costs (note 6)

Rent deposit (note 8 (a))

Mineral properties (note 6)

Right of use asset (note 8 (a))

3 unchanged sentences

Long-term portion of lease liability (note 8 (b))

Mineral properties purchase option

Shareholders’ equity

13 unchanged sentences

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

Exploration expense

Feasibility study (note 6(d))

Foreign exchange (gain) loss

Foreign exchange loss (gain)

General and administrative

Investor relations

Mineral properties expense (note 6(a))

Mineral properties expense (note 6(d))

Professional fees

2 unchanged sentences

Total expenses

Loss on held for trading investments

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 earnings (loss) for the year

Basic earnings (loss) per common share

Diluted earnings (loss) per common share

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

Comprehensive (loss) earnings for the year

Basic (loss) earnings per common share

Diluted (loss) earnings per common share

Basic weighted average number of common shares outstanding

9 unchanged sentences

Balance – 2018

Bought-deal financing (note 9)

Share issuance costs

Exercise of options

Restricted Share Units

NovaGold DSU conversion

Stock-based compensation

Loss for the year

Balance – 2018

Exercise of options

Exercise of warrants

11 unchanged sentences

Balance – 2020

Exercise of options

Stock-based compensation

Loss for the year

Balance – 2021

(See accompanying notes to the consolidated financial statements)

4 unchanged sentences

Cash flows used in operating activities

Earnings (loss) for the year

(Loss) earnings for the year

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

1 unchanged sentence

Loss on equity investment in Ambler Metals LLC (note 4(b))

Loss on held for trading investments

Unrealized foreign exchange loss (gain)

Unrealized foreign exchange loss

Stock-based compensation

6 unchanged sentences

Proceeds from exercise of warrants

Proceeds from bought deal financing (note 9(d))

Share issuance costs

Cash flows from investing activities

1 unchanged sentence

Mineral properties funding

Proceeds from the sale of investments, net of fees

(Decrease) increase in cash and cash equivalents

Mineral claims

Decrease in cash and cash equivalents

Effect of exchange rate on cash and cash equivalents

Cash and cash equivalents – beginning of year

Cash and cash equivalents – end of year

Cash and cash equivalents – end of the year

(See accompanying notes to the consolidated financial statements)

4 unchanged sentences

The Company is engaged in the exploration and development of mineral properties, through our equity investee (note 4), 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 (“US” or “USA”).

The Company also conducts early-stage exploration through a wholly owned subsidiary, 995 Exploration Inc.

2) Summary of significant accounting policies

1 unchanged sentence

These 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 subsidiary, NovaCopper US Inc.

(dba “Trilogy Metals US”).

GAAP”) and include the accounts of Trilogy and its wholly owned subsidiaries, NovaCopper US Inc.

(dba “Trilogy Metals US”) and 995 Exploration Inc.

All intercompany transactions are eliminated on consolidation.

7 unchanged sentences

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 as a VIE as the entity is dependent on funding from its owners.

We identified Ambler Metals LLC (“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.

Therefore, the Company has determined that it is not the primary beneficiary of the VIE.

The Company’s maximum exposure to loss is its investment in Ambler Metals LLC.

Ambler Metals LLC is a non-publicly traded equity investee holding exploration and development projects.

Investments in nonconsolidated entities accounted for under the equity method are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred.

The Company’s maximum exposure to loss is its investment in Ambler Metals.

Ambler Metals is a non-publicly traded equity investee holding exploration and development projects.

Investments in unconsolidated entities accounted for under the equity method are assessed for impairment whenever changes in the facts and circumstances indicate an other than temporary loss in value has occurred.

When indicators exist, the fair value is estimated and compared to the investment carrying value.

If any impairment is judgmentally determined to be other than temporary, the carrying value of the investment is written down to fair value.

The fair value of the impaired investment is determined based on quoted market prices, if available, or upon the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants and observed market earnings multiples of comparable companies.

Events that could indicate impairment of an investment in affiliates include a significant decrease in long-term expected commodity prices, a significant increase in expected operating or capital costs, unfavorable exploration results or technical studies, a significant decrease in reserves, a loss of significant mineral claims or a change in the development plan or strategy for the project.

Plant and equipment were recorded at cost and amortization began when the asset was put into service.

If any impairment is determined to be other than temporary, the carrying value of the investment is written down to fair value.

The fair value of the impaired investment may be based upon the valuation of cohort companies with similar projects or the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants and observed market earnings multiples of comparable companies.

Judgement is applied in evaluating indicators of impairment.

Events that could indicate impairment of an investment in affiliates include sustained losses by the investment, the absence of the ability to recover the carrying amount of the investment, or a deterioration of market conditions, among others.

Plant and equipment are recorded at cost and amortization begins when the asset is put into service.

Amortization is calculated on a straight-line basis over the respective assets’ estimated useful lives.

5 unchanged sentences

Mineral properties and development costs

All direct costs related to the acquisition of mineral property interests were capitalized.

Mineral property exploration expenditures were expensed when incurred.

All direct costs related to the acquisition of mineral property interests are capitalized.

Mineral property exploration expenditures is expensed when incurred.

When it has been established that a mineral deposit is commercially mineable, an economic analysis has been completed and permits are obtained, the costs subsequently incurred to develop a mine on the property prior to the start of mining operations are capitalized.

1 unchanged sentence

The acquisition of title to mineral properties is a complicated and uncertain process.

The Company has taken steps, in accordance with industry standards, to verify the title to mineral properties held prior to being transferred to the Joint Venture, in which it has an interest.

Although the Company has made efforts to ensure that legal titles to its mining assets are properly recorded, there can be no assurance that such title will be secured indefinitely.

The Company has taken steps, in accordance with industry standards, to verify the title to mineral properties.

Although the Company has made efforts to ensure that legal titles to its mining assets are properly recorded through the Joint Venture, there can be no assurance that such title will be secured indefinitely.

Impairment of long-lived assets

4 unchanged sentences

It is possible that material changes could occur that may adversely affect management’s estimates.

The liability method of accounting for income taxes is used and is based on differences between the accounting and tax bases of assets and liabilities.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement.

Leases with a term greater than one year are recognized on the balance sheet as ROU assets and short-term and long-term lease liabilities, as applicable.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease.

The Company typically only includes an initial lease term in its assessment of a lease arrangement.

It also considers termination options and factors those into the determination of lease payments.

Options to renew a lease are not included in the assessment unless there is reasonable certainty that the Company will renew.

Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected remaining lease term.

Certain adjustments to the ROU asset may be required for items such as

incentives received.

The interest rate implicit in lease contracts is typically not readily determinable.

As a result, the Company utilizes its incremental borrowing rate, which reflects the fixed rate at which it could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The liability method of accounting for income taxes is used and is based on differences between the accounting and tax basis of assets and liabilities.

Deferred income tax assets and liabilities are recognized for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes using enacted income tax rates expected to be in effect for the period in which the differences are expected to reverse.

2 unchanged sentences

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.

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

Held-for-trading financial assets and liabilities are recorded at fair value as determined by active market prices or valuation models, as appropriate.

Valuation models require the use of assumptions which may include the expected life of the instrument, the expected volatility, dividend payouts, and interest rates.

In determining these assumptions, management uses readily observable market inputs where available or, where not available, inputs generated by management.

Changes in fair value of held-for-trading financial instruments are recorded in income or loss for the period.

Held-for-trading financial assets consisting of common share and warrant investments in a publicly-held mining company were disposed during the 2018 fiscal year.

Loans and receivables are recorded initially at fair value, net of transaction costs incurred, and subsequently at amortized cost using the effective interest rate method.

12 unchanged sentences

Stock-based compensation

Compensation expense for options granted to employees, directors and certain service providers is determined based on estimated fair values of the options at the time of grant using the 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 and the risk-free interest rate over the expected life of the option.

Compensation expense for options granted to employees, directors and certain service providers is determined based on estimated fair values of the options at the time of grant using the 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 compensation cost is recognized using the graded attribution method over the vesting period of the respective options.

The expense relating to the fair value of stock options is included in expenses and is credited to contributed surplus.

The expense relating to the fair value of stock options is included in expenses, net of forfeitures and is credited to contributed surplus.

Shares are issued from treasury in settlement of options exercised.

1 unchanged sentence

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

The expense relating to the fair value of the units is included in expenses, net of forfeitures and is credited to other liabilities or contributed surplus based on the unit’s

classification.

The expense relating to the fair value of the units is included in expenses, net of forfeitures and is credited to other liabilities or contributed surplus based on the unit’s classification.

Units may be settled in either i) cash, and/or ii) shares purchased in the open market, and/or iii) shares issued from treasury, at the Company’s election at the time of vesting.

2 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 judgments include the assessment of potential indicators of impairment of mineral properties.

Significant judgments include the assessment of potential indicators of impairment of mineral properties and investments in affiliates.

Significant estimates include the measurement of the South32 property acquisition option and subsequent equity method investment, income taxes, and the valuation of stock-based compensation.

Actual results could differ materially from those reported.

Accounting standards adopted

In February 2016, the FASB issued new accounting requirements for accounting for, presentation of, and classification of leases (“ASU 2016-02”) which, together with subsequent amendments, is included in ASC 842, Leases.

ASC 842 became effective for the Company as of December 1, 2019.

The Company adopted ASC 842 using the modified retrospective transition method by applying the transition provision and recording our cumulative adjustment to opening deficit at the beginning of the period of adoption on December 1, 2019, rather than at the beginning of the comparative period presented.

Therefore, in the comparative periods, we continue to apply the legacy guidance in ASC 840, including its disclosure requirements.

We elected to apply all of the transition practical expedients available, including:

● the package of three practical expedients to (1) not reassess whether any expired or existing contracts are or contain leases, (2) not reassess the lease classification for any expired or existing leases, and (3) not reassess initial direct costs for any existing lease;

● the hindsight practical expedient to use hindsight when determining lease term and assessing impairment of right-of-use assets, if any;

● the easements practical expedient to continue applying our current policy for accounting for any land easements expired before or existing as of December 1, 2019.

In addition, we elected to apply the short-term lease recognition exemption and elected to apply the practical expedient to not separate lease and non-lease components for all applicable leases on transition.

The adoption of this new standard resulted in the recognition of right of use assets and lease liabilities of $ 786,000 as at December 1, 2019.

3) Accounts receivable

3 unchanged sentences

GST input tax credits

Recoverable payments

Ambler Metals LLC

Ambler Metals

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 year end.

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

4) Investment in Ambler Metals LLC

Formation of Ambler Metals LLC

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 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’ invoices and being reimbursed pursuant to a services agreement (the “Services Agreement”) between Trilogy and Ambler Metals until the back office is fully transitioned to a new permanenet team employed by the joint venture.

On February 11, 2020, the Company completed the formation of a 50/ 50 joint venture named Ambler Metals 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 $ 145 million, resulting in each party’s subsidiaries directly owning a 50 % interest in Ambler Metals.

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

The Services Agreement ended on December 31, 2020.

Ambler Metals LLC is an independently operated company jointly controlled by Trilogy and South32 through a four -member board, of which two members are currently appointed by Trilogy based on its 50 % equity interest.

Ambler Metals is an independently operated company jointly controlled by Trilogy and South32 through a four -member board, of which two members are currently 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 LLC 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 LLC 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 LLC through our representation on its board, we use the equity method of accounting for our investment in Ambler Metals LLC.

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 totaled $ 173 million, as well as approximately $ 114,000 of amounts receivable per the Services Agreement.

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.

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 investment in Ambler Metals 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, which totaled $ 160.1 million at November 30, 2021.

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

in thousands of dollars

2 unchanged sentences

Mineral properties

Property, plant and equipment

Property, plant and equipment located in Alaska

Elimination of Fairbanks warehouse right of use asset

5 unchanged sentences

Gain on derecognition

Carrying value of investment in Ambler Metals LLC

During the year ended November 30, 2020, 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 net loss of $ 5.7 million for the period between

February 11, 2020 (date of joint venture formation) to November 30, 2020.

The carrying value of Trilogy’s 50 % investment in Ambler Metals LLC as at November 30, 2020 is summarized on the following table.

Carrying value of investment in Ambler Metals

During the year ended November 30, 2021, Trilogy recognized, based on its 50 % ownership interest in Ambler Metals, an equity loss equivalent to its pro rata share of Ambler Metals' net loss of $ 26.2 million for the year ended November 30, 2021 ( 2020 - $ 5.7 million).

The carrying value of Trilogy’s 50 % investment in Ambler Metals as at November 30, 2021 is summarized on the following table.

in thousands of dollars

February 11, 2020, fair value ascribed to Ambler Metals LLC interest

February 11, 2020, fair value ascribed to Ambler Metals interest

Share of loss on equity investment from February 11, 2020 to November 30, 2020

November 30, 2020, equity method investment

The following table summarizes Ambler Metals LLC's Balance Sheet as at November 30, 2020.

November 30, 2020, investment in Ambler Metals

Share of loss on equity investment for the year ending November 30, 2021

November 30, 2021, investment in Ambler Metals

The following table summarizes Ambler Metals’ Balance Sheet as at November 30, 2021.

in thousands of dollars

November 30, 2021

Current assets:

Cash, deposits and prepaid expenses

Non - current assets:

Property, equipment and mineral properties

Loan receivable from South32

Current liabilities:

November 30, 2020

Loan receivable from South32 (current and long-term)

Mineral properties

Total liabilities

Accounts payable and accrued liabilities

Non - current liabilities:

Lease obligation

The following table summarizes Ambler Metals LLC's net loss from the formation of the joint venture on February 11, 2020 to the end of the reporting period on November 30, 2020.

Members' equity (Total assets less Total liabilities)

The following table summarizes Ambler Metals’ net loss for the year ended November 30, 2021 and from the formation of the joint venture on February 11, 2020 to the end of the reporting period on November 30, 2020.

For the prior year comparative, $ 0.3 million has been reclassed from general and administrative expense to mineral properties expense in order to reflect the current year presentation.

in thousands of dollars

Period ending

February 11, 2020 to

November 30, 2021

Mineral properties expense

General and administrative expense

November 30, 2020

Corporate salaries and wages

General and administrative

Lease expense

Mineral property expense

Professional fees

Foreign exchange (gain)/loss

Interest income

1 unchanged sentence

Related party transactions - services agreement income

The Company charged $0.9 million of expenses related to technical services, including geological, engineering, environmental and human resources and accounting services in connection with the Services Agreement.

In addition, the Company received payments of $2.8 million related to operating expenses paid on behalf of Ambler Metals from February 11, 2020 to November 30, 2020 pursuant to the Services Agreement.

During the fiscal year, the Company charged approximately $ 22,000 (2020 - $ 0.9 million) of expenses related to technical services, including geological, engineering, environmental and human resources and accounting services in connection with the Services Agreement.

In addition, the Company received payments of approximately $ 4,000 (2020 - $ 2.8 million) related to operating expenses paid on behalf of Ambler Metals for the year ended November 30, 2021.

5) Fixed assets

in thousands of dollars

November 30, 2020

British Columbia, Canada

Furniture and equipment

Leasehold improvements

Computer hardware and software

Machinery, and equipment

Computer hardware and software

in thousands of dollars

Furniture and

Machinery and

November 30, 2019

British Columbia, Canada

Furniture and equipment

Leasehold improvements

Computer hardware and software

Machinery, and equipment

Computer hardware and software

ASC 842 adoption

Assets derecognized (note 4(a))

November 30, 2020

ROU asset reclass

November 30, 2021

Accumulated amortization

November 30, 2019

Assets derecognized (note 4(a))

November 30, 2020

ROU asset reclass

November 30, 2021

Net Book Value

November 30, 2020

November 30, 2021

6) Mineral properties and development costs

1 unchanged sentence

November 30, 2020

Acquisition costs

November 30, 2021

1 unchanged sentence

November 30, 2019

Acquisition costs

November 30, 2020

22 unchanged sentences

To subscribe for 50 % of the joint venture, the Option Agreement provided that South32 must contribute $ 150 million, plus (i) any amounts Trilogy spends on matched parallel funding to a maximum of $ 16 million over the three-year period and (ii) $ 5 million if the option had been exercised between April 1, 2018 and March 31, 2019 or $ 10 million if the option was exercised between April 1, 2019 and the expiration date of the option, less the amount of the initial funding contributed by South32 (the “Subscription Price”).

South32 funded the full three-year option period.

funded the full three-year option period.

During the year ended November 30, 2020, South32 elected to exercise the option to form the LLC and made the Subscription Price payment on February 5, 2020 (see note 4 (a)).

5 unchanged sentences

Mineral properties expense

The following table summarizes mineral properties expense for the years ended November 30, 2020, 2019 and 2018, and includes expenditures funded by South32 up to the formation of the Joint Venture on February 11, 2020, as applicable.

The following table summarizes mineral properties expense for the UKMP, Alaska, USA for the years ended November 30, 2021, 2020 and 2019, and includes expenditures funded by South32 up to the formation of the Joint Venture on February 11, 2020, as applicable.

In thousands of dollars

4 unchanged sentences

Wages and benefits

Mineral property expenses consist of direct drilling, personnel, community, resource reporting and other exploration expenses as outlined above, as well as indirect project support expenses such as fixed wing charters, helicopter support, fuel, and other camp operation costs.

Other than the feasibility costs related to the Arctic project funded directly by the Company, no additional mineral properties expenses were incurred subsequent to the formation of the joint venture, as on February 11, 2020, upon the formation of the Joint Venture with South32, all mineral properties previously held by the Company were contributed to Ambler Metals LLC.

The Company funded the Arctic Project feasibility study, costs for which were $ 1.1 million since the formation of the Joint Venture on February 11, 2020.

Mineral property expenses consisted of direct drilling, personnel, community, resource reporting and other exploration expenses as outlined above, as well as indirect project support expenses such as fixed wing charters, helicopter support, fuel, and other camp operation costs.

The Company funded the Arctic Project feasibility study costs of $ 1.1 million since the formation of the Joint Venture on February 11, 2020.

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 year ended November 30, 2020.

16 unchanged sentences

ASC transition as at December 1, 2019

Lease accretion

Net amortization

Derecognition of Fairbanks warehouse lease

Balance as at November 30, 2020

Net amortization

Previously classified in fixed assets

Balance as at November 30, 2021

The pre-transition rent deposit of approximately $ 114,000 was transferred to the Right-of-use asset upon adoption of ASC 842 on December 1, 2019 and is included in the opening balance of approximately $ 681,000 .

5 unchanged sentences

November 30, 2021

November 30, 2020

Operating lease costs

6 unchanged sentences

● Cash paid for amounts included in the measurement of lease liabilities was $ 201,783 .

● No cash was paid upon termination of a lease for office and warehouse space and reassignment to Ambler Metals LLC that resulted in the derecognition of the right-of-use asset of $ 92,974 and the operating lease liability of $ 93,006 .

During the year ended November 30, 2020, no cash was paid upon termination of a lease for office and warehouse space and reassignment to Ambler Metals that resulted in the derecognition of the right-of-use asset of $ 92,974 and the operating lease liability of $ 93,006 .

Future minimum payments relating to the lease recognized in our balance sheet as of November 30, 2021 are as follows:

12 unchanged sentences

Restricted Share Units

Deferred Share Units

Exercise of warrants

November 30, 2020

Exercise of options

Restricted Share Units

November 30, 2021, issued and outstanding

8 unchanged sentences

The options are exercisable for a maximum of five years from the date of grant and may be subject to vesting provisions.

During the year ended November 30, 2020, a total of 4,445,000 options (2019 - 3,077,500 options) at a weighted-average exercise price of CDN$ 2.79 (2019 - CDN$ 2.86 ) were granted 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.

During the year ended November 30, 2021, a total of 3,374,150 options (2020 – 4,445,000 options, 2019 – 3,077,500 ) at a weighted-average exercise price of CDN$ 2.52 (2020 - CDN$ 2.79 , 2019 – CDN$ 2.86 ) were granted to employees, service providers and directors exercisable for a period of five years with various vesting terms from immediate vesting to over a two-year period.

The weighted-average fair value attributable to options granted in 2021 was $ 0.84 (2020 - $ 0.90 , 2019 - $ 1.03 ).

12 unchanged sentences

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

The exercise prices have been converted to US dollars based on the November 30, 2021 closing foreign exchange rate of CAD$1.00 = US$ 0.7817 .

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

10 unchanged sentences

exercise price

Range of price (CAD$)

$ 0.44 to $ 0.50

Range of exercise price

$ 0.55 to $ 1.00

3 unchanged sentences

$ 2.51 to $ 2.67

The aggregate intrinsic value of vested share options (the market value less the exercise price) at November 30, 2020 was $ 2.4 million (2019 - $ 7.2 million, 2018 - $ 12.2 million) and the aggregate intrinsic value of exercised options in 2020 was $ 2.6 million (2019 - $ 2.6 million, 2018 - $ 0.5 million).

The aggregate intrinsic value of vested share options (the market value less the exercise price) at November 30, 2021 was $ 0.8 million (2020 - $ 2.4 million, 2019 - $ 7.2 million) and the aggregate intrinsic value of exercised options for the year ended November 30, 2021 was $ 1.4 million (2020 - $ 2.6 million, 2019 - $ 2.6 million).

Restricted Share Units and Deferred Share Units

2 unchanged sentences

All units are accounted for as equity-settled awards.

On April 13 2020, a Company officer was granted 200,000 RSUs, all of which vested immediately.

There were no RSUs granted during the fiscal year ended November 30, 2021.

Directors were granted 58,925 DSUs throughout the year ended November 30, 2021 ( 2020 – 83,775 , 2019 – 137,514 ) based on their election to receive 50 % of their annual retainer in DSUs.

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

Number of RSUs

A summary of the Company’s DSU Plan and changes during the year ended November 30, 2021 is as follows:

Number of DSUs

6 unchanged sentences

The Company had no warrants outstanding as at November 30, 2021.

(d) Bought deal financing

On April 20, 2018, the Company completed a bought-deal financing for gross proceeds of $ 28.7 million by issuing 24,784,482 common shares at $ 1.16 per common share.

Expenses including bank commissions, legal fees, stock exchange and other fees totaled $ 1.8 million for net proceeds of $ 26.9 million.

10) 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 our mineral properties through our equity investee (note 4) and maintain a capital structure which optimizes the costs of capital at an acceptable 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 our main mineral properties, at the UKMP, through our equity investee (note 4) 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.

10 unchanged sentences

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 Company’s investments were held for trading and marked-to-market at each period end with changes in fair value recorded to the statement of loss.

The South32 purchase option was a derivative financial liability measured at fair value with changes in value recorded to the statement of loss.

Financial risk management

17 unchanged sentences

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

and cash equivalents.

Based on balances as at November 30, 2020, a 1 % change in interest rates would result in a change in net loss of $ 0.1 million, assuming all other variables remain constant.

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

Based on balances as at November 30, 2021, a 1 % change in interest rates would result in a change in net loss of approximately $ 160 , 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;

7 unchanged sentences

The Company did not have any financial assets and liabilities that were measured and recognized at fair value as at November 30, 2021.

During the year ended November 30, 2018, the Company disposed of its remaining shares of Gold Mining Inc., a publicly-held mineral exploration company.

12) Income taxes

55 unchanged sentences

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

Furthermore, tax reform provisions under section 172 allow federal net operating losses arising in tax years subsequent to December 31, 2017 to be carried forward indefinitely.

As at November 30, 2020 the Company has $ 14.2 million in operating losses that can be carried forward indefinitely.

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.

Furthermore, tax reform provisions under Section 172 allow federal net operating losses arising in tax years subsequent to December 31, 2017 to be carried forward indefinitely.

As at November 30, 2021 the Company has approximately $ 21 million in operating losses that can be carried forward indefinitely.

On June 19, 2015, we completed the Sunward acquisition which resulted in an acquisition of control of Sunward Resources ULC under of the Income Tax Act in Canada.

3 unchanged sentences

14) Subsequent events

On December 10, 2020 directors were granted 700,000 stock options vesting immediately.

Employees were granted 2,674,500 stock options, of which 427,650 options vested immediately, with the remainder vesting equally in thirds on the grant date, the first anniversary of the grant date, and the second anniversary of the grant date.

On December 9, 2021 directors were granted 350,000 stock options and 144,200 DSUs, all vesting immediately.

Employees and service providers were granted 1,734,500 stock options, of which 578,166 options vested immediately, with the remainder vesting equally on the first anniversary of the grant date and the second anniversary of the grant date.

Employees were also granted 648,600 RSUs, of which 391,332 units vested on the grant date.

The remaining 257,268 units vest equally on the first anniversary of the grant date and the second anniversary of the grant date.

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