What changed in this filing

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Item 1. Financial Statements

2024-04-03 compared with 2023-10-11 · 116 added, 149 removed, 238 unchanged (53% of the section changed)

3 unchanged sentences

in thousands of US dollars

August 31, 2023

February 29, 2024

November 30, 2023

Current assets

Cash and cash equivalents

Accounts receivable

7 unchanged sentences

Total current liabilities

Long-term portion of lease liability

Total liabilities

2 unchanged sentences

Contributed surplus

Contributed surplus – options (note 6(b))

Contributed surplus – units (note 6(c))

Contributed surplus – options (note 6(a))

Contributed surplus – units (note 6(b))

Total shareholders' equity

6 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

For the Quarter Ended February 29, 2024

Trilogy Metals Inc.

3 unchanged sentences

For the three months ended

For the nine months ended

August 31, 2023

August 31, 2022

August 31, 2023

August 31, 2022

February 29, 2024

February 28, 2023

Exploration expenses

Foreign exchange (gain) loss

Foreign exchange loss (gain)

General and administrative

3 unchanged sentences

Total expenses

Gain on disposition of mineral property

Interest and other income

Services agreement income

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

Write off mineral properties

Loss and comprehensive loss for the period

5 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

For the Quarter Ended February 29, 2024

Trilogy Metals Inc.

5 unchanged sentences

Balance – November 30, 2022

Exercise of options

Restricted Share Units

Joint venture contribution

Services settled by common shares

Stock-based compensation

1 unchanged sentence

Balance – February 28, 2023

Exercise of options

Restricted Share Units

Stock-based compensation

Loss for the period

Balance – May 31, 2022

Restricted Share Units

Stock-based compensation

Loss for the period

Balance - August 31, 2022

Balance – November 30, 2023

5 unchanged sentences

Balance – February 29, 2024

Shares issued for private placement, net of share issue cost

Restricted Share Units

Deferred Share Units conversion

Services settled by common shares

Stock-based compensation

Loss for the period

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 August 31, 2023

For the Quarter Ended February 29, 2024

Trilogy Metals Inc.

1 unchanged sentence

in thousands of US dollars

For the nine months ended

August 31, 2023

August 31, 2022

For the three months ended

February 29, 2024

February 28, 2023

Cash flows used in operating activities

1 unchanged sentence

Adjustments to reconcile net loss to cash flows in operating activities

Professional fees settled by common shares

Consulting fees settled by common shares

Office lease accounting

Gain on disposal of mineral property

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

Unrealized foreign exchange loss (gain)

Unrealized foreign exchange (gain) loss

Stock-based compensation

Write off mineral properties

Net change in non-cash working capital

Decrease in accounts receivable

Increase in deposits and prepaid amounts

Decrease in accounts payable and accrued liabilities

Decrease (increase) in accounts receivable

Decrease in deposits and prepaid amounts

Increase in accounts payable and accrued liabilities

Total cash flows used in operating activities

Cash flows from financing activities

Issuance of common shares, net of share issue cost (note 6(a))

Proceeds from exercise of options

Total cash flows from financing activities

Cash flows from investing activities

Proceeds from disposition of mineral property

Total cash flows from investing activities

Increase (decrease) in cash

Decrease in cash

Effect of exchange rate on cash

Cash – beginning of the period

Cash – end of the period

Cash and cash equivalents – beginning of the period

Cash and cash equivalents – end of the period

(See accompanying notes to the interim consolidated financial statements)

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

For the Quarter Ended February 29, 2024

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

1) Nature of operations

1) Nature of operations and going concern

Trilogy Metals Inc.

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

(“Trilogy” or the “Company”) was incorporated in British Columbia, Canada 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”).

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

These interim consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for at least twelve months from the date of approval of these consolidated financial statements.

As at February 29, 2024, the Company had working capital (current assets less current liabilities) of $ 1.7 million (2023 - $ 2.4 million) and an accumulated deficit of $ 85.4 million (2023 - $ 81.8 million).

The Company recorded a loss of $ 3.6 million and cash outflow from operations of $ 0.6 million for the quarter ended February 29, 2024.

The continued operations of the Company are dependent on its ability to obtain additional financing or to generate future cash flows.

The Company has no recurring source of operating cash inflows at its current stage.

The Company intends to finance its future requirements through a combination of debt and equity issuance.

There is no assurance that the Company will be able to obtain such financings or obtain them on favourable terms.

These material uncertainties raise substantial doubt about the Company’s ability to continue as a going concern.

These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Such adjustments could be material.

2) Summary of significant accounting policies

7 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 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.

These interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position as of February 29, 2024 and our results of operations and cash flows for the three-month period ended February 29, 2024 and February 28, 2023.

The results of operations for the three-month period ended February 29, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2024.

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 9, 2024.

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.

These interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on April 2, 2024.

Trilogy Metals Inc.

For the Quarter Ended February 29, 2024

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

Use of estimates and measurement uncertainties

6 unchanged sentences

Significant judgments are made in assessing the possibility of impairment.

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.

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

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

Factors consider include but are 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.

9 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 August 31, 2023, totaled $ 136.9 million.

Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals, which, as February 29, 2024, totaled $ 134 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 $ 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.

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 February 29, 2024 (2023 - $ 3.0 million).

During the three-month period ending February 29, 2024, Trilogy made a $ 112,000 equity contribution to Ambler Metals through the issuance of 143,507 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 $ 112,000 in cash for their 50 % share.

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

November 30, 2022, Investment in Ambler Metals

Joint venture equity contribution

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.

The carrying value of Trilogy’s 50 % investment in Ambler Metals as at February 29, 2024 is summarized on the following table.

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

For the Quarter Ended February 29, 2024

Trilogy Metals Inc.

1 unchanged sentence

in thousands of dollars

August 31, 2023

November 30, 2023, Investment in Ambler Metals

Joint venture equity contribution

Share of loss on equity investment for the three month period ending February 29, 2024

February 29, 2024, Investment in Ambler Metals

The following table summarizes Ambler Metals’ Balance Sheet as at February 29, 2024.

in thousands of dollars

February 29, 2024

November 30, 2023

Cash and cash equivalents

Mineral properties

2 unchanged sentences

Members' equity (total assets less total liabilities)

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.

Members’ cash and cash equivalents are held at one bank, the majority of cash and cash equivalent is uninsured as at February 29, 2024.

(d) The following table summarizes Ambler Metals' loss for the three-month period ending February 29, 2024 and February 28, 2023.

in thousands of dollars

Three months ended

Nine months ended

August 31, 2023

August 31, 2022

August 31, 2023

August 31, 2022

February 29, 2024

February 28, 2023

Corporate salaries and wages

2 unchanged sentences

Professional fees

Foreign exchange (gain)/loss

Foreign exchange loss

Interest and other income

Comprehensive loss

(e) Related party transactions

During the three-month period ended February 29, 2024, the Company charged $10,000 (2023 - $Nil) related to human resources and accounting services in connection with the Service Agreement.

In addition, the company received payments of $ 16,000 (2023 - $ Nil ) related to operating expenses paid on behalf of Ambler Metals pursuant to the Service Agreement.

Trilogy Metals Inc.

For the Quarter Ended February 29, 2024

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

4) Accounts payable and accrued liabilities

in thousands of dollars

August 31, 2023

February 29, 2024

November 30, 2023

3 unchanged sentences

Accounts payable and accrued liabilities

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

Of the accrued salaries and vacation approximately $ 155,000 was settled, subsequent to the end of the first quarter, on March 1, 2024 through the issuance of common shares of the Company.

$ 155,000 was settled on December 1, 2023 through the issuance of common shares of the Company from the November 30, 2023 balance.

(a) Right-of-use asset

2 unchanged sentences

Net amortization

Balance as at August 31, 2023

Balance as at February 29, 2024

(b) Lease liabilities

3 unchanged sentences

in thousands of dollars

Nine months ended

August 31, 2023

August 31, 2022

Three months ended

February 29, 2024

February 28, 2023

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 August 31, 2023, the weighted-average remaining lease term is 0.6 years and the weighted-average discount rate is 8 % .

As at February 29, 2024, the weighted-average remaining lease term is 0.3 years and the weighted-average discount rate is 8 % .

Significant judgment was used in the determination of the incremental borrowing rate which included estimating the Company’s credit rating.

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

Supplemental cash and non-cash information relating to our leases during the three-month period ending February 29, 2024 are as follows:

● Cash paid for amounts included in the measurement of lease liabilities was $ 33,158 .

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

Effect of discounting

Present value of lease payments recognized as lease liability

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

For the Quarter Ended February 29, 2024

Trilogy Metals Inc.

6 unchanged sentences

November 30, 2023

Private Placement, net of share issue cost

Restricted Share Units

Deferred Share Units

NovaGold deferred share units conversion

Services settled by common shares

Joint venture equity contribution (note 3(b))

August 31, 2023, issued and outstanding

Joint venture equity contribution (note 3(a))

February 29, 2024, 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 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

On April 25, 2023, the Company completed a non-brokered private placement of 5,854,545 common shares of the Company (the “Common Share”) at a price of $ 0.55 per Common Share for gross proceeds of $ 3.2 million and net proceeds of $ 3.1 million.

Financing costs consisted of legal and stock exchange fees.

As at February 29, 2024, 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.

Stock options

1 unchanged sentence

The fair value attributable to this option grants was CDN$ 0.27 (2023 - CDN$ 0.37 ).

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.

For the three-month period ended February 29, 2024, Trilogy recognized a stock-based compensation charge of $ 0.3 million (2023 - $ 0.5 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 August 31, 2023

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

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

August 31, 2023

Assumptions used in the pricing model for the three-month period ended February 29, 2024 are as provided below.

February 29, 2024

Risk-free interest rates

3 unchanged sentences

Expected dividends

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.

As at February 29, 2024, there were 2,533,339 non-vested options outstanding with a weighted average exercise price of CDN$ 0.66 ;

the value of non-vested stock option expense not yet recognized was $ 0.5 million.

This expense is expected to be recognized over the next 22 months .

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

Trilogy Metals Inc.

For the Quarter Ended February 29, 2024

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

A summary of the Company’s stock option outstanding and changes during the three-month period ended February 29, 2024 is as follows:

February 29, 2024

Weighted average

4 unchanged sentences

Balance – end of the period

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.

There were no stock options exercised during the three-month period ended February 29, 2024.

The following table summarizes information about the stock options outstanding at February 29, 2024.

average years

5 unchanged sentences

$ 3.01 to $ 3.41

$ 3.01 to $ 3.50

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).

The aggregate intrinsic value of vested stock options (the market value less the exercise price) at February 29, 2024 was $Nil (2023 - $ 0.02 million) and the aggregate intrinsic value of exercised options for the three-month period ending February 29, 2024 was $Nil (2023 - $Nil).

Restricted Share Units and Deferred Share Units

2 unchanged sentences

All units are accounted for as equity-settled awards.

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:

A summary of the Company’s unit plans and changes during the three-month period ending February 29, 2024 is as follows:

Number of RSUs

4 unchanged sentences

Balance – end of the period

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.

For the three-month period ending February 29, 2024, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $ 1.5 million (2023 - $ 1.1 million), net of estimated forfeitures.

Trilogy Metals Inc.

For the Quarter Ended February 29, 2024

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

7) Financial instruments

1 unchanged sentence

These risks and management’s objectives, policies and procedures for managing these risks are disclosed as follows.

The Company’s financial instruments consist of cash, accounts receivable, deposits, and accounts payable and accrued liabilities.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities.

The fair value of the Company’s financial instruments approximates their carrying value due to the short-term nature of their maturity.

The Company’s financial instruments initially measured at fair value and then held at amortized cost include cash, accounts receivable, deposits, and accounts payable and accrued liabilities.

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.

Financial risk management

3 unchanged sentences

The Company operates in the United States and Canada.

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 .

The Company’s exposure to currency risk at February 29, 2024 is limited to the Canadian dollar balances consisting of cash of approximately CDN$ 542,000 , accounts receivable of approximately CDN$ 19,000 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 $ 15,000 .

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 August 31, 2023.

The Company holds cash with a Canadian chartered financial institution of which the majority is uninsured as at February 29, 2024.

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

3 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 29, 2024 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 first quarter, on March 1, 2024, through the issuance of common shares of the Company (note 9).

Trilogy Metals Inc.

For the Quarter Ended August 31, 2023

For the Quarter Ended February 29, 2024

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 $ 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 August 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 February 29, 2024, 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 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.

On March 1, 2024, pursuant to previous elections, the Board of Directors were granted 188,670 DSUs in settlement of approximately $ 82,750 of director fees and senior management were granted 353,347 RSUs in lieu of cash salaries of approximately $ 155,000 , 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 August 31, 2023

For the Quarter Ended February 29, 2024

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