What changed in this filing

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Item 1. Financial Statements

2022-10-05 compared with 2022-07-06 · 93 added, 57 removed, 286 unchanged (34% of the section changed)

3 unchanged sentences

in thousands of US dollars

August 31, 2022

November 30, 2021

21 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

For the Quarter Ended August 31, 2022

Trilogy Metals Inc.

3 unchanged sentences

For the three months ended

For the six months ended

Foreign exchange loss

For the nine months ended

August 31, 2022

August 31, 2021

August 31, 2022

August 31, 2021

Exploration expenses

Foreign exchange loss (gain)

General and administrative

3 unchanged sentences

Total expenses

Gain on disposition of mineral property

Interest and other income

9 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

For the Quarter Ended August 31, 2022

Trilogy Metals Inc.

13 unchanged sentences

Balance – May 31, 2021

Exercise of options

Stock-based compensation

Loss for the period

Balance - August 31, 2021

Balance – November 30, 2021

10 unchanged sentences

Balance – May 31, 2022

Restricted Share Units

Stock-based compensation

Loss for the period

Balance – August 31, 2022

(See accompanying notes to the interim consolidated financial statements)

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

For the Quarter Ended August 31, 2022

Trilogy Metals Inc.

1 unchanged sentence

in thousands of US dollars

For the six months ended

For the nine months ended

August 31, 2022

August 31, 2021

Cash flows used in operating activities

2 unchanged sentences

Office lease accounting

Gain on disposal of mineral property

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

Unrealized foreign exchange loss

Unrealized foreign exchange (gain) loss

Stock-based compensation

3 unchanged sentences

Increase in deposits and prepaid amounts

(Decrease) increase in accounts payable and accrued liabilities

Decrease in accounts payable and accrued liabilities

Total cash flows used in operating activities

Cash flows from financing activities

Proceeds from exercise of options

Total cash flows from financing activities

Cash flows from investing activities

Mineral claims

Proceeds from disposition of mineral property

Total cash flows from (used in) investing activities

Decrease in cash and cash equivalents

4 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

For the Quarter Ended August 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.

At August 31, 2022, we had $ 3.1 million in cash and cash equivalents and working capital of $ 2.9 million.

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

9 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 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.

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

The results of operations for the nine-month period ended August 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 July 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 October 4, 2022.

Use of estimates and measurement uncertainties

9 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

For the Quarter Ended August 31, 2022

Trilogy Metals Inc.

17 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 May 31, 2022, totaled $ 155.7 million.

Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals, which, as at August 31, 2022, totaled $ 146.8 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 $ 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.

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 $ 17.9 million for the three-month period ending August 31, 2022 (2021 - $ 12.1 million) and $ 26.6 million for the nine-month period ending August 31, 2022 (2021 - $ 17.8 million).

During the nine-month period ending August 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 May 31, 2022 is summarized on the following table.

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

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

For the Quarter Ended August 31, 2022

Trilogy Metals Inc.

3 unchanged sentences

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.

Share of loss on equity investment for the nine-month period ending August 31, 2022

August 31, 2022, Investment in Ambler Metals

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

in thousands of dollars

August 31, 2022

November 30, 2021

4 unchanged sentences

Members' equity (total assets less total liabilities)

The loan receivable from South32 is repaid through a quarterly demand notice prepared by Ambler Metals, thirty days prior to the beginning of the following calendar quarter.

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 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.

South32 fully repaid the remaining loan balance on June 21, 2022.

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

in thousands of dollars

Three months ended

Six months ended

Nine months ended

August 31, 2022

August 31, 2021

August 31, 2022

August 31, 2021

Corporate salaries and wages

5 unchanged sentences

Comprehensive loss

Related party transactions

During the three-month period ended August 31, 2022, the Company transferred a mineral claim to Ambler Metals and received net proceeds of approximately $ 140,000 .

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

For the Quarter Ended August 31, 2022

Trilogy Metals Inc.

2 unchanged sentences

in thousands of dollars

August 31, 2022

November 30, 2021

7 unchanged sentences

Net amortization

Balance as at May 31, 2022

Balance as at August 31, 2022

(b) Lease liabilities

3 unchanged sentences

in thousands of dollars

Six months ended

Nine months ended

August 31, 2022

August 31, 2021

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 May 31, 2022, the weighted-average remaining lease term is 2.1 years and the weighted-average discount rate is 8 % .

As of August 31, 2022, the weighted-average remaining lease term is 1.8 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 six-month period ending May 31, 2022 are as follows:

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

● Cash paid for amounts included in the measurement of lease liabilities was $ 153,097 .

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

For the Quarter Ended August 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:

Future minimum payments relating to the lease recognized in our balance sheet as of August 31, 2022 are as follows:

in thousands of dollars

August 31, 2022

Total undiscounted lease payments

10 unchanged sentences

Joint venture equity contribution (note 3(b))

May 31, 2022, issued and outstanding

August 31, 2022, issued and outstanding

Stock options

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.

During the nine-month period ended August 31, 2022, 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$ 0.94 (2021 - CDN$ 0.84 ).

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.

No stock options were granted during the second and third quarters.

For the nine-month period ended August 31, 2022, Trilogy recognized a stock-based compensation charge of $ 1.4 million (2021 - $ 2.98 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 May 31, 2022

For the Quarter Ended August 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.

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

August 31, 2022

Risk-free interest rates

3 unchanged sentences

Expected dividends

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

As of August 31, 2022, there were 1,779,504 non-vested options outstanding with a weighted average exercise price of CDN$ 2.37 ;

the non-vested stock option expense not yet recognized was $ 0.37 million.

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

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

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

August 31, 2022

Weighted average

1 unchanged sentence

Number of options

Balance – beginning of the period

Balance – beginning of the fiscal year

Balance – end of the period

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.

There were no stock options exercised during the third quarter.

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

average years

6 unchanged sentences

$ 3.01 to $ 3.41

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).

The aggregate intrinsic value of vested stock options (the market value less the exercise price) at August 31, 2022 was $Nil (2021 - $ 2.2 million) and the aggregate intrinsic value of exercised options for the nine-month period ending August 31, 2022 was $ 0.05 million (2021 - $ 0.63 million).

Restricted Share Units and Deferred Share Units

2 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

For the Quarter Ended August 31, 2022

Trilogy Metals Inc.

2 unchanged sentences

All units are accounted for as equity-settled awards.

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

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

Number of RSUs

Number of DSUs

Balance – beginning of the period

Balance – beginning of the fiscal year

Balance – end of the period

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.

For the nine-month period ending August 31 2022, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $ 1.6 million (2021 - $ 0.10 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 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 .

The Company’s exposure to currency risk at August 31, 2022 is limited to the Canadian dollar balances consisting of cash of approximately CDN$ 54,000 , accounts receivable of approximately CDN$ 14,000 and accounts payable of approximately CDN$ 320,000 .

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 $ 19,000 .

8 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2022

For the Quarter Ended August 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:

Contractually obligated undiscounted cash flow requirements as at August 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).

Included in accounts payable and accrued liabilities is $ 207,000 for accrued salaries and director fees that were settled, subsequent to the end of the third quarter, on September 1, 2022 through the issuance of common shares of the Company (note 9).

Interest rate risk

1 unchanged sentence

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.

Based on balances as at August 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;

3 unchanged sentences

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.

On September 1, 2022 the Board of Directors and senior management were granted 344,323 RSUs in settlement of approximately $ 207,000 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 May 31, 2022

For the Quarter Ended August 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