What changed in this filing

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Item 1. Financial Statements

2023-10-11 compared with 2023-07-14 · 107 added, 82 removed, 280 unchanged (40% of the section changed)

3 unchanged sentences

in thousands of US dollars

August 31, 2023

November 30, 2022

9 unchanged sentences

Total current liabilities

Long-term portion of lease liability (note 5(b))

Long-term portion of lease liability

Total liabilities

12 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

3 unchanged sentences

For the three months ended

For the six months ended

For the nine months ended

August 31, 2023

August 31, 2022

August 31, 2023

August 31, 2022

Exploration expenses

5 unchanged sentences

Total expenses

Gain on disposition of mineral property

Interest and other income

8 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

16 unchanged sentences

Balance – May 31, 2022

Restricted Share Units

Stock-based compensation

Loss for the period

Balance - August 31, 2022

Balance – November 30, 2022

Exercise of options

Restricted Share Units

5 unchanged sentences

Shares issued for private placement, net of share issue cost

Exercise of options

Restricted Share Units

4 unchanged sentences

Balance – May 31, 2023

Restricted Share Units

Services settled by common shares

NovaGold deferred share units conversion

Stock-based compensation

Loss for the period

Balance – August 31, 2023

(See accompanying notes to the interim consolidated financial statements)

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

1 unchanged sentence

in thousands of US dollars

For the six months ended

For the nine months ended

August 31, 2023

August 31, 2022

Cash flows used in operating activities

3 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 loss (gain)

Stock-based compensation

2 unchanged sentences

Decrease in accounts receivable

Decrease (increase) in deposits and prepaid amounts

Increase (decrease) in accounts payable and accrued liabilities

Increase in deposits and prepaid amounts

Decrease in accounts payable and accrued liabilities

Total cash flows used in operating activities

4 unchanged sentences

Cash flows from investing activities

Proceeds from disposition of mineral property

Total cash flows from investing activities

5 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

2 unchanged sentences

Trilogy Metals Inc.

(“Trilogy” or the “Company”) was incorporated in British Columbia under the Business Corporations Act (BC) on April 27, 2011.

(“Trilogy” or the “Company”) was incorporated in British Columbia under the Business Corporations Act (British Columbia) on April 27, 2011.

The Company is engaged in the exploration and development of mineral properties, through our equity investee (see note 3), 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”).

9 unchanged sentences

References to CDN$ refer to amounts in Canadian dollars.

These interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position as of May 31, 2023 and our results of operations and cash flows for the six-month period ended May 31, 2023 and May 31, 2022.

The results of operations for the six-month period ended May 31, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2023.

These interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position as of August 31, 2023 and our results of operations and cash flows for the nine-month period ended August 31, 2023 and August 31, 2022.

The results of operations for the nine-month period ended August 31, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2023.

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 14, 2023.

These interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on July 13, 2023.

These interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on October 10, 2023.

Use of estimates and measurement uncertainties

1 unchanged sentence

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 equity method investments where key judgement is the delay on the Ambler Access Project is temporary and the delay was considered when assessing indicators of impairment.

Significant judgments include the assessment of potential indicators of impairment for our equity method investments where key judgement is the delay on the Ambler Access Project is temporary and the delay was considered when assessing indicators of impairment.

Significant estimates include the measurement of income taxes, and the valuation of stock-based compensation.

5 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

1 unchanged sentence

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

If an indicator of impairment is determined to exist, the fair value of the impaired investment is determined based on the valuation of cohort companies with similar projects 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.

Management calculates the estimated undiscounted future net cash flows relating to the asset or asset group using estimated future prices, proven and probable reserves and other mineral resources, and operating, capital and reclamation costs.

When the carrying value of an asset exceeds the related undiscounted cash flows, the asset is written down to its estimated fair value, which is usually determined using discounted future cash flows.

Management’s estimates of mineral prices, mineral resources, foreign exchange rates, production levels operating, capital and reclamation costs are subject to risk and uncertainties that may affect the determination of the recoverability of the long-lived asset.

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

3) Investment in Ambler Metals LLC

8 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, 2023, totaled $ 139.8 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, 2023, totaled $ 136.9 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 $ 1.6 million for the three-month period ending May 31, 2023 (2022 - $ 2.5 million) and $ 3.1 million for the six-month period ending May 31, 2023 (2022 - $ 4.4 million).

During the six-month period ending May 31, 2023, Trilogy made a $ 111,000 equity contribution to Ambler Metals through the issuance of 143,505 common shares of the Company as part of the long-term incentive compensation for Ambler Metals executives.

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 $ 5.8 million for the three-month period ending August 31, 2023 (2022 - $ 17.9 million) and $ 12.0 million for the nine-month period ending August 31, 2023 (2022 - $ 26.6 million).

During the nine-month period ending August 31, 2023, Trilogy made a $ 111,000 equity contribution to Ambler Metals through the issuance of 143,505 common shares of the Company as part of the long-term incentive compensation for Ambler Metals executives.

Likewise, South32 made an equivalent equity contribution to Ambler Metals for $ 111,000 in cash for their 50 % share.

The carrying value of Trilogy’s 50 % investment in Ambler Metals as at May 31, 2023 is summarized on the following table.

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

The carrying value of Trilogy’s 50 % investment in Ambler Metals as at August 31, 2023 is summarized on the following table.

in thousands of dollars

1 unchanged sentence

Joint venture equity contribution

Share of loss on equity investment for the six month period ending May 31, 2023

May 31, 2023, Investment in Ambler Metals

The following table summarizes Ambler Metals’ Balance Sheet as at May 31, 2023.

Share of loss on equity investment for the nine-month period ending August 31, 2023

August 31, 2023, Investment in Ambler Metals

The following table summarizes Ambler Metals’ Balance Sheet as at August 31, 2023.

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

in thousands of dollars

August 31, 2023

November 30, 2022

3 unchanged sentences

Members' equity (total assets less total liabilities)

Members’ cash is held at one bank, the majority of cash is uninsured as at May 31, 2023.

(d) The following table summarizes Ambler Metals' loss for the six-month period ending May 31, 2023.

Members’ cash is held at one bank, the majority of cash is uninsured as at August 31, 2023.

(d) The following table summarizes Ambler Metals' loss for the nine-month period ending August 31, 2023.

in thousands of dollars

Three months ended

Six months ended

Nine months ended

August 31, 2023

August 31, 2022

August 31, 2023

August 31, 2022

Corporate salaries and wages

3 unchanged sentences

Foreign exchange (gain)/loss

Interest income

Interest and other income

Comprehensive loss

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

4) Accounts payable and accrued liabilities

in thousands of dollars

August 31, 2023

November 30, 2022

3 unchanged sentences

Accounts payable and accrued liabilities

Of the accrued salaries and vacation approximately $ 155,000 was settled, subsequent to the end of the second quarter, on June 1, 2023 through the issuance of common shares of the Company.

Of the accrued salaries and vacation approximately $ 166,000 was settled, subsequent to the end of the third quarter, on September 1, 2023 through the issuance of common shares of the Company.

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

(a) Right-of-use asset

2 unchanged sentences

Net amortization

Balance as at May 31, 2023

Balance as at August 31, 2023

(b) Lease liabilities

3 unchanged sentences

in thousands of dollars

Six months ended

Nine months ended

August 31, 2023

August 31, 2022

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 at May 31, 2023, the weighted-average remaining lease term is 0.9 years and the weighted-average discount rate is 8 % .

As at August 31, 2023, the weighted-average remaining lease term is 0.6 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, 2023 are as follows:

Supplemental cash and non-cash information relating to our leases during the nine-month period ending August 31, 2023 are as follows:

● Cash paid for amounts included in the measurement of lease liabilities was $ 149,102 .

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

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, 2023 are as follows:

Future minimum payments relating to the lease recognized in our balance sheet as of August 31, 2023 are as follows:

in thousands of dollars

August 31, 2023

Total undiscounted lease payments

1 unchanged sentence

Present value of lease payments recognized as lease liability

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

6) Share capital

7 unchanged sentences

Deferred Share Units

NovaGold deferred share units conversion

Services settled by common shares

Joint venture equity contribution (note 3(b))

May 31, 2023, issued and outstanding

August 31, 2023, issued and outstanding

On April 30, 2012, under the NovaGold Arrangement, Trilogy committed to issue common shares to satisfy holders of NovaGold deferred share units (“NovaGold DSUs”), once vested, on record as of the close of business April 27, 2012.

When vested, Trilogy committed to deliver one common share to the holder for every six shares of NovaGold the holder is entitled to receive, rounded down to the nearest whole number.

As at May 31, 2023, a total of 9,293 NovaGold DSUs remain outstanding representing a right to receive 1,549 Common Shares in Trilogy, which will settle upon certain directors retiring from NovaGold’s board.

As at August 31, 2023, a total of 5,144 NovaGold DSUs remain outstanding representing a right to receive 859 Common Shares in Trilogy, which will settle upon certain directors retiring from NovaGold’s board.

Common shares issuance

4 unchanged sentences

The fair value attributable to this option grants was CDN$ 0.37 (2022 - CDN$ 0.94 ).

There were no stock options granted during the three-month period ended May 31, 2023.

There were no stock options granted during the second and third quarters.

For the nine-month period ended August 31, 2023, Trilogy recognized a stock-based compensation charge of $ 0.8 million (2022 - $ 1.4 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, 2023

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

For the six-month period ended May 31, 2023, Trilogy recognized a stock-based compensation charge of $ 0.6 million (2022 - $ 1.2 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 six-month period ended May 31, 2023 are as provided below.

Assumptions used in the pricing model for the nine-month period ended August 31, 2023 are as provided below.

August 31, 2023

Risk-free interest rates

3 unchanged sentences

Expected dividends

As at May 31, 2023, there were 2,131,757 non-vested options outstanding with a weighted average exercise price of CDN$ 1.02 ;

As at August 31, 2023, there were 2,131,757 non-vested options outstanding with a weighted average exercise price of CDN$ 1.02 ;

the non-vested stock option expense not yet recognized was $ 0.24 million.

This expense is expected to be recognized over the next 16 months .

A summary of the Company’s stock option outstanding and changes during the six-month period ended May 31, 2023 is as follows:

A summary of the Company’s stock option outstanding and changes during the nine-month period ended August 31, 2023 is as follows:

August 31, 2023

Weighted average

4 unchanged sentences

Balance – end of the period

There were no stock options exercised during the six-month period ended May 31, 2023.

The following table summarizes information about the stock options outstanding at May 31, 2023.

There were no stock options exercised during the nine-month period ended August 31, 2023.

The following table summarizes information about the stock options outstanding at August 31, 2023.

average years

6 unchanged sentences

$ 3.01 to $ 3.50

The aggregate intrinsic value of vested stock options (the market value less the exercise price) at May 31, 2023 was $Nil (2022 - $ 0.13 million) and the aggregate intrinsic value of exercised options for the six-month period ending May 31, 2023 was $Nil (2022 - $ 0.05 million).

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

The aggregate intrinsic value of vested stock options (the market value less the exercise price) at August 31, 2023 was $Nil (2022 - $Nil) and the aggregate intrinsic value of exercised options for the nine-month period ending August 31, 2023 was $Nil (2022 - $ 0.05 million).

Restricted Share Units and Deferred Share Units

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, 2023 is as follows:

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

A summary of the Company’s unit plans and changes during the nine-month period ending August 31, 2023 is as follows:

Number of RSUs

4 unchanged sentences

Balance – end of the period

For the six-month period ending May 31, 2023, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $ 1.8 million (2022 - $ 1.2 million), net of estimated forfeitures.

For the nine-month period ending August 31, 2023, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $ 2.0 million (2022 - $ 1.6 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, 2023 is limited to the Canadian dollar balances consisting of cash of approximately CDN$ 51,000 , accounts receivable of approximately CDN$ 22,000 and accounts payable of approximately CDN$ 360,000 .

The Company’s exposure to currency risk at August 31, 2023 is limited to the Canadian dollar balances consisting of cash of approximately CDN$ 126,000 , accounts receivable of approximately CDN$ 12,000 and accounts payable of approximately CDN$ 340,000 .

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 $ 14,000 .

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations.

The Company holds cash with a Canadian chartered financial institution of which the majority is uninsured as at May 31, 2023.

The Company holds cash with a Canadian chartered financial institution of which the majority is uninsured as at August 31, 2023.

The Company’s only significant exposure to credit risk is equal to the balance of cash as recorded in the financial statements.

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

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 undiscounted cash flow requirements as at May 31, 2023 are as follows:

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

Contractually obligated undiscounted cash flow requirements as at August 31, 2023 are as follows:

in thousands of dollars

Accounts payable and accrued liabilities

Included in accounts payable and accrued liabilities approximately $ 155,000 is for accrued salaries that were settled, subsequent to the end of the second quarter, on June 1, 2023 through the issuance of common shares of the Company (note 9).

Included in accounts payable and accrued liabilities approximately $ 166,000 is for accrued salaries that were settled, subsequent to the end of the third quarter, on September 1, 2023 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.

Based on balances as at May 31, 2023, 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, 2023, 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, 2023, the Board of Directors were granted 163,142 DSUs in settlement of approximately $ 79,000 of director fees and senior management were granted 248,531 RSUs in lieu of cash salaries of approximately $ 155,000 , all vesting immediately.

On September 1, 2023, pursuant to previous elections, the Board of Directors were granted 175,127 DSUs in settlement of approximately $ 82,750 of director fees and senior management were granted 283,693 RSUs in lieu of cash salaries of approximately $ 166,000 , all vesting immediately.

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

Trilogy Metals Inc.

For the Quarter Ended May 31, 2023

For the Quarter Ended August 31, 2023

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