What changed in this filing

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Item 1. Financial Statements

2022-07-06 compared with 2022-04-06 · 95 added, 88 removed, 248 unchanged (42% of the section changed)

3 unchanged sentences

in thousands of US dollars

February 28, 2022

November 30, 2021

21 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

For the Quarter Ended May 31, 2022

Trilogy Metals Inc.

3 unchanged sentences

For the three months ended

February 28, 2022

February 28, 2021

Amortization of exploration expenses

For the six months ended

Foreign exchange loss

4 unchanged sentences

Total expenses

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

Interest and other income

Services agreement income

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

Write off mineral properties

Comprehensive loss for the period

5 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

For the Quarter Ended May 31, 2022

Trilogy Metals Inc.

9 unchanged sentences

Balance – February 28, 2021

Exercise of options

Stock-based compensation

Loss for the period

Balance – May 31, 2021

Balance – November 30, 2021

5 unchanged sentences

Balance – February 28, 2022

Exercise of options

Restricted Share Units

Stock-based compensation

Loss for the period

Balance – May 31, 2022

(See accompanying notes to the interim consolidated financial statements)

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

For the Quarter Ended May 31, 2022

Trilogy Metals Inc.

1 unchanged sentence

in thousands of US dollars

For the three months ended

February 28, 2022

February 28, 2021

For the six months ended

Cash flows used in operating activities

5 unchanged sentences

Stock-based compensation

Write off mineral properties

Net change in non-cash working capital

Decrease in accounts receivable

Decrease (increase) in deposits and prepaid amounts

Decrease in accounts payable and accrued liabilities

Increase in deposits and prepaid amounts

(Decrease) increase in accounts payable and accrued liabilities

Cash flows from financing activities

6 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

For the Quarter Ended May 31, 2022

Trilogy Metals Inc.

5 unchanged sentences

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

At May 31, 2022, we had $ 3.5 million in cash and cash equivalents and working capital of $ 3.4 million.

The Company continues to manage its cash expenditures through its working capital including cash preservation efforts related to Director and management compensation.

We believe our existing cash resources will provide sufficient funds to carry out our planned operations for the 12-months from the date that our consolidated financial statements are issued.

2) Summary of significant accounting policies

1 unchanged sentence

These 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 subsidiary, NovaCopper US Inc.

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

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

3 unchanged sentences

References to CDN$ refer to amounts in Canadian dollars.

These unaudited interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position as of February 28, 2022 and our results of operations and cash flows for the three months ended February 28, 2022 and February 28, 2021.

The results of operations for the three months ended February 28, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2022.

These unaudited interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position as of May 31, 2022 and our results of operations and cash flows for the six months ended May 31, 2022 and May 31, 2021.

The results of operations for the six months ended May 31, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2022.

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 11, 2022.

These interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on April 5, 2022.

These interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on July 5, 2022.

Use of estimates and measurement uncertainties

7 unchanged sentences

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

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

Management considers several factors in

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

For the Quarter Ended May 31, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

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

These factors are subjective and require consideration at each period end.

14 unchanged sentences

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, as at February 28, 2022, totaled $ 158 million.

Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals, which, as at May 31, 2022, totaled $ 155.7 million.

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 $ 3.8 million for the three-month period ending February 28, 2022 (2021 - $ 2.2 million).

During the three-month period ended February 28, 2022, Trilogy made a $ 51,000 equity contribution to Ambler Metals through the issuance of 31,469 common shares of the Company as part of the long-term incentive compensation for an Ambler Metals executive.

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 $ 4.9 million for the three-month period ending May 31, 2022 (2021 - $ 3.4 million) and $ 8.7 million for the six-month period ending May 31, 2022 (2021 - $ 5.6 million).

During the six-month period ending May 31, 2022, Trilogy made a $ 51,000 equity contribution to Ambler Metals through the issuance of 31,469 common shares of the Company as part of the long-term incentive compensation for an Ambler Metals executive.

Likewise, South32 made an equivalent equity contribution to Ambler Metals for $ 51,000 in cash for their 50 % share.

The carrying value of Trilogy’s 50 % investment in Ambler Metals as at February 28, 2022 is summarized on the following table.

in thousands of dollars

November 30, 2021, Investment in Ambler Metals

Joint venture equity contribution

Share of loss on equity investment for the three-month period ending February 28, 2022

February 28, 2022, Investment in Ambler Metals

The carrying value of Trilogy’s 50 % investment in Ambler Metals as at May 31, 2022 is summarized on the following table.

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

For the Quarter Ended May 31, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

The following table summarizes Ambler Metals’ Balance Sheet as at February 28, 2022.

in thousands of dollars

February 28, 2022

November 30, 2021, Investment in Ambler Metals

Joint venture equity contribution

Share of loss on equity investment for the six-month period ending May 31, 2022

May 31, 2022, Investment in Ambler Metals

The following table summarizes Ambler Metals’ Balance Sheet as at May 31, 2022.

in thousands of dollars

November 30, 2021

6 unchanged sentences

The demand notice amount is based on Ambler Metals’ expected expenditures, pursuant to their approved program and operating budget (South32’s 50 % share) for the applicable calendar quarter.

During the three-month period ended February 28, 2022, Ambler Metals received $ 2.4 million in loan repayments from South32, consisting of $ 0.3 million in interest and $ 2.1 million in principal.

(d) The following table summarizes Ambler Metals' loss for the three-month period ending February 28, 2022.

During the six-month period ending May 31, 2022, Ambler Metals received $ 2.4 million (2021 - $ 1.1 ) in loan repayments from South32, consisting of $ 0.3 million (2021 - $ 1.1 million) in interest and $ 2.1 million (2021 - $nil) in principal.

(d) The following table summarizes Ambler Metals' loss for the three and six-month period ending May 31, 2022.

in thousands of dollars

February 28, 2022

February 28, 2021

Three months ended

Six months ended

Corporate salaries and wages

5 unchanged sentences

Comprehensive loss

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

4) Accounts payable and accrued liabilities

in thousands of dollars

February 28, 2022

November 30, 2021

3 unchanged sentences

Accounts payable and accrued liabilities

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

(a) Right-of-use asset

2 unchanged sentences

Net amortization

Balance as at February 28, 2022

Balance as at May 31, 2022

(b) Lease liabilities

3 unchanged sentences

in thousands of dollars

Three months ended

February 28, 2022

February 28, 2021

Six months ended

Operating lease costs

2 unchanged sentences

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, 2022, the weighted-average remaining lease term is 2.25 years and the weighted-average discount rate is 8 % .

As of May 31, 2022, the weighted-average remaining lease term is 2.1 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, 2022 are as follows:

Supplemental cash and non-cash information relating to our leases during the six-month period ending May 31, 2022 are as follows:

● Cash paid for amounts included in the measurement of lease liabilities was $ 101,951 .

Future minimum payments relating to the lease recognized in our balance sheet as of February 28, 2022 are as follows:

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

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, 2022 are as follows:

in thousands of dollars

February 28, 2022

Total undiscounted lease payments

1 unchanged sentence

Present value of lease payments recognized as lease liability

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

6) Share capital

7 unchanged sentences

Joint venture equity contribution (note 3(b))

February 28, 2022, issued and outstanding

May 31, 2022, issued and outstanding

Stock options

During the three-month period ended February 28, 2022, the Company made an annual grant of 1,734,500 stock options (2021 - 3,374,150 stock options) at an exercise price of CDN$ 2.21 (2021 - CDN$ 2.52 ) 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.

During the first quarter, the Company granted 1,734,500 stock options (2021 - 3,374,150 stock options) at an exercise price of CDN$ 2.21 (2021 - CDN$ 2.52 ) 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 options granted in the period was CDN$ 0.90 (2021 - CDN$ 0.84 ).

For the three-month period ended February 28, 2022, Trilogy recognized a stock-based compensation charge of $ 0.86 million (2021 - $ 2.1 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

No stock options were granted during the second quarter.

For the six-month period ended May 31, 2022, Trilogy recognized a stock-based compensation charge of $ 1.2 million (2021 - $ 2.6 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.

Assumptions used in the pricing model for the three-month period ended February 28, 2022 are as provided below.

February 28, 2022

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

Assumptions used in the pricing model for the six-month period ended May 31, 2022 are as provided below.

Risk-free interest rates

3 unchanged sentences

Expected dividends

As of February 28, 2022, there were 2,317,838 non-vested options outstanding with a weighted average exercise price of CDN$ 2.43 ;

As of May 31, 2022, there were 2,312,838 non-vested options outstanding with a weighted average exercise price of CDN$ 2.43 ;

the non-vested stock option expense not yet recognized was $ 0.57 million.

This expense is expected to be recognized over the next year.

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

A summary of the Company’s stock option plan and changes during the three-month period ended February 28, 2022 is as follows:

February 28, 2022

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

A summary of the Company’s stock option plan and changes during the six-month period ended May 31, 2022 is as follows:

Weighted average

3 unchanged sentences

Balance – end of the period

During the three-month period ended February 28, 2022, the Company received net proceeds of $ 17,640 upon the exercise of 31,674 options.

The following table summarizes information about the stock options outstanding at February 28, 2022.

During the six-month period ended May 31, 2022, the Company received net proceeds of $ 54,295 upon the exercise of 81,674 options.

The following table summarizes information about the stock options outstanding at May 31, 2022.

average years

6 unchanged sentences

$ 3.01 to $ 3.41

The aggregate intrinsic value of vested share options (the market value less the exercise price) at February 28, 2022 was $ 0.15 million (2021 - $ 3.3 million) and the aggregate intrinsic value of exercised options for the three months ended February 28, 2022 was $ 0.03 million (2021 - $ 0.17 million).

The aggregate intrinsic value of vested stock options (the market value less the exercise price) at May 31, 2022 was $ 0.13 million (2021 - $ 6.8 million) and the aggregate intrinsic value of exercised options for the six-month period ending May 31, 2022 was $ 0.05 million (2021 - $ 0.71 million).

Restricted Share Units and Deferred Share Units

The Company has a Restricted Share Unit Plan (“RSU Plan”) to provide long-term incentives to employees and consultants and a Non-Executive Director Deferred Share Unit Plan (“DSU Plan”) to offset cash payments for fees to directors.

Awards under the RSU Plan and DSU Plan have been 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.

Awards under the RSU Plan and DSU Plan have been settled in common shares of the Company with each restricted share unit

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

(“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 three-month period ended February 28, 2022 is as follows:

A summary of the Company’s unit plans and changes during the six-month period ending May 31, 2022 is as follows:

Number of RSUs

2 unchanged sentences

Balance – end of the period

For the three-month period ended February 28, 2022, Trilogy recognized a stock-based compensation charge of $ 1.0 million (2021 - $ 0.04 million), net of estimated forfeitures.

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

For the six-month period ending May 31 2022, Trilogy recognized a stock-based compensation charge of $ 1.2 million (2021 - $ 0.07 million), net of estimated forfeitures.

7) Financial instruments

9 unchanged sentences

The Company operates in the United States and Canada.

The Company’s exposure to currency risk at February 28, 2022 is limited to the Canadian dollar balances consisting of cash of approximately CDN$ 491,000 , accounts receivable of approximately CDN$ 22,000 and accounts payable of approximately CDN$ 480,000 .

The Company’s exposure to currency risk at May 31, 2022 is limited to the Canadian dollar balances consisting of cash of approximately CDN$ 284,000 , accounts receivable of approximately CDN$ 15,000 and accounts payable of approximately CDN$ 500,000 .

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 $ 16,000 .

7 unchanged sentences

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

Contractually obligated undiscounted cash flow requirements as at February 28, 2022 are as follows:

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

Contractually obligated undiscounted cash flow requirements as at May 31, 2022 are as follows:

in thousands of dollars

Accounts payable and accrued liabilities

Included in accounts payable and accrued liabilities is $ 216 thousand for accrued salaries and director fees that were settled, subsequent to the end of the second quarter, on June 1, 2022 through the issuance of common shares of the Company (note 9).

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

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

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

and cash equivalents.

Based on balances as at February 28, 2022, a 1 % change in interest rates would result in a negligible change in net loss, 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 May 31, 2022, a 1 % change in interest rates would result in a negligible change in net loss, assuming all other variables remain constant.

As we are currently in the exploration phase none of our financial instruments are exposed to commodity price risk;

2 unchanged sentences

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

9) Subsequent event

On June 1, 2022 the Board of Directors and senior management were granted 244,216 RSUs in settlement of $ 216 thousand in accrued salaries and director fees, all vesting immediately.

The grants were in support of an effort to preserve cash and increase share ownership by settling the cash component of director fees and a portion of senior management salaries in shares of the Company.

Trilogy Metals Inc.

For the Quarter Ended February 28, 2022

For the Quarter Ended May 31, 2022

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