What changed in this filing

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Item 1. Financial Statements

2024-10-08 compared with 2024-07-10 · 109 added, 73 removed, 277 unchanged (40% of the section changed)

3 unchanged sentences

in thousands of US dollars

August 31, 2024

November 30, 2023

10 unchanged sentences

Total current liabilities

Long-term portion of lease liability

Total liabilities

12 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

3 unchanged sentences

For the three months ended

For the six months ended

For the nine months ended

August 31, 2024

August 31, 2023

August 31, 2024

August 31, 2023

Exploration expenses

15 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

18 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

Balance – November 30, 2023

10 unchanged sentences

Balance – May 31, 2024

Restricted Share Units

Services settled by common shares

Stock-based compensation

Loss for the period

Balance – August 31, 2024

(See accompanying notes to the condensed interim consolidated financial statements)

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

1 unchanged sentence

in thousands of US dollars

For the six months ended

For the nine months ended

August 31, 2024

August 31, 2023

Cash flows used in operating activities

23 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

14 unchanged sentences

References to CDN$ refer to amounts in Canadian dollars.

These condensed interim consolidated financial statements include all adjustments necessary for the fair statement of the Company’s financial position as of May 31, 2024 and our results of operations and cash flows for the six-month period ended May 31, 2024 and May 31, 2023.

The results of operations for the six-month period ended May 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2024.

These condensed interim consolidated financial statements include all adjustments necessary for the fair statement of the Company’s financial position as of August 31, 2024 and our results of operations and cash flows for the nine-month periods ended August 31, 2024 and August 31, 2023.

The results of operations for the nine-month period ended August 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2024.

As these condensed 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 condensed interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on July 9, 2024.

These condensed interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on October 7, 2024.

Use of estimates and measurement uncertainties

9 unchanged sentences

If the underlying assets are not recoverable, the Company will record an impairment charge equal to the difference between the carrying amount of the equity investment and its fair value.

This assessment is subjective and require consideration at each period end.

This assessment is subjective and requires consideration at each period end.

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

9 unchanged sentences

As we have significant influence over Ambler Metals through our representation on its board, we use the equity method of accounting for our investment in Ambler Metals.

Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals, which, as of May 31, 2024, totaled $ 121.2 million.

Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals, which, as of August 31, 2024, totaled $ 108.1 million (2023 - $ 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 $ 0.6 million for the three-month period ending May 31, 2024 (2023 - $ 1.6 million) and $ 1.4 million for the six-month period ending May 31, 2024 (2023 - $ 3.1 million).

During the six-month period ending May 31, 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.

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 $ 1.2 million for the three-month period ending August 31, 2024 (2023 - $ 5.8 million) and $ 4.0 million for the nine-month period ending August 31, 2024 (2023 - $ 12.0 million).

During the nine-month period ending August 31, 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 May 31, 2024 is summarized on the following table.

The carrying value of Trilogy’s 50 % investment in Ambler Metals as at August 31, 2024 is summarized on the following table.

in thousands of dollars

2 unchanged sentences

Return of capital

Share of loss on equity investment for the six-month period ending May 31, 2024

May 31, 2024, Investment in Ambler Metals

The following table summarizes Ambler Metals’ Balance Sheet as at May 31, 2024.

Share of loss on equity investment for the nine-month period ending August 31, 2024

August 31, 2024, Investment in Ambler Metals

The following table summarizes Ambler Metals’ Balance Sheet as at August 31, 2024.

in thousands of dollars

August 31, 2024

November 30, 2023

5 unchanged sentences

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

Notes to the Condensed Interim Consolidated Financial Statements

Members’ cash and cash equivalents are held at one bank, the majority of cash and cash equivalent is uninsured as at May 31, 2024.

During the second quarter, Ambler Metals returned $ 25 million of excess cash to the members.

Subsequent to May 31, 2024, Ambler Metals returned another $ 25 million of excess cash to the members.

(d) The following table summarizes Ambler Metals' loss for the six-month period ended May 31, 2024 and May 31, 2023.

Ambler Metals’ cash and cash equivalents are held at one bank of which the majority is uninsured.

During the second and third quarters, Ambler Metals returned $ 50 million of excess cash to the members.

(d) The following table summarizes Ambler Metals' loss for the three-month and nine-month periods ended August 31, 2024 and August 31, 2023.

in thousands of dollars

Three months ended

Six months ended

Nine months ended

August 31, 2024

August 31, 2023

August 31, 2024

August 31, 2023

Corporate salaries and wages

6 unchanged sentences

(e) Related party transactions

During the six-month period ended May 31, 2024, the Company charged $ 25,000 (2023 - $ Nil ) related to human resources and accounting services in connection with a service agreement between the company and Ambler Metals.

During the nine-month period ended August 31, 2024, the Company charged $ 47,000 (2023 - $ Nil ) related to human resources and accounting services in connection with a service agreement between the Company and Ambler Metals.

In addition, the Company received payments of $ 64,000 (2023 - $ Nil ) related to operating expenses paid on behalf of Ambler Metals pursuant to the service agreement.

1 unchanged sentence

in thousands of dollars

August 31, 2024

November 30, 2023

3 unchanged sentences

Accounts payable and accrued liabilities

Subsequent to the end of the second quarter, on June 3, 2024, approximately $ 153,000 of accrued salaries was settled through the issuance of common shares of the Company.

Subsequent to the end of the third quarter, on September 3, 2024, approximately $ 153,000 of accrued salaries was settled through the issuance of common shares of the Company.

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

3 unchanged sentences

Balance as at November 30, 2023

Net amortization

Balance as at May 31, 2024

Net amortization for lease ended June 30, 2024

ROU assets recognized for lease commenced July 1, 2024

Net amortization for lease commenced July 1, 2024

Balance as at August 31, 2024

The Company’s previous office lease ended on June 30, 2024.

The Company entered into a new office lease commencing on July 1, 2024, with a 4-year term ending in June 2028, and with no renewal option.

During the quarter ended August 31, 2024, the Company recognized a ROU asset of $ 170,000 for the new office lease.

(b) Lease liabilities

The Company’s lease arrangements primarily consist of an operating lease for our office space ending in June 2024.

The Company’s lease arrangement consists of an operating lease for our office space ending in June 2028.

There are no extension options.

1 unchanged sentence

in thousands of dollars

Six months ended

Nine months ended

August 31, 2024

August 31, 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 May 31, 2024, the weighted-average remaining lease term is 0.1 years and the weighted-average discount rate is 8 % .

As at August 31, 2024, the weighted-average remaining lease term is 3.8 years and the weighted-average discount rate is 9 % .

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, 2024 are as follows:

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

Supplemental cash and non-cash information relating to our leases during the nine-month period ending August 31, 2024 are as follows:

● Cash paid for amounts included in the measurement of lease liabilities was $ 45,561 , of which $ 33,159 related to the office lease that expired on June 30, 2024 and $ 12,402 related to the new office lease that commenced on July 1, 2024.

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

Notes to the Condensed Interim Consolidated Financial Statements

Future minimum payments relating to the lease recognized in our balance sheet as of August 31, 2024 are as follows:

in thousands of dollars

August 31, 2024

Total undiscounted lease payments

Effect of discounting

Present value of lease payments recognized as lease liability

6) Share capital

7 unchanged sentences

Joint venture equity contribution (note 3(a))

May 31, 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 May 31, 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.

August 31, 2024, issued and outstanding

Stock options

1 unchanged sentence

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

No grants were made during the three-month period ended May 31, 2024 or 2023.

For the six-month period ended May 31, 2024, Trilogy recognized a stock-based compensation charge of $ 0.4 million (2023 - $ 0.6 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

No grants were made during the three-month periods ended May 31, 2024 or August 31, 2024.

For the three-month period ended August 31, 2024, Trilogy recognized a stock-based compensation charge of $ 0.1 million (2023 - $ 0.1 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

For the nine-month period ended August 31, 2024, Trilogy recognized a stock-based compensation charge of $ 0.5 million (2023 - $ 0.8 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, 2024 are as provided below.

Trilogy Metals Inc.

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

Notes to the Condensed Interim Consolidated Financial Statements

Assumptions used in the pricing model for the nine-month period ended August 31, 2024 are as provided below.

August 31, 2024

Risk-free interest rates

3 unchanged sentences

Expected dividends

As at May 31, 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 $ 0.3 million.

This expense is expected to be recognized over the next 12 months .

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

Trilogy Metals Inc.

Notes to the Condensed Interim Consolidated Financial Statements

A summary of the Company’s stock options outstanding and changes during the six-month period ended May 31, 2024 is as follows:

As at August 31, 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 $ 0.2 million of which approximately $ 0.1 million will be recognized during the quarter ending November 30, 2024 and the remainder throughout the next fiscal year.

A summary of the Company’s stock options outstanding and changes during the nine-month period ended August 31, 2024 is as follows:

August 31, 2024

Weighted average

4 unchanged sentences

Balance – end of the period

There were no stock options exercised during the six-month period ended May 31, 2024.

The following table summarizes information about the stock options outstanding at May 31, 2024.

There were no stock options exercised during the nine-month period ended August 31, 2024.

The following table summarizes information about the stock options outstanding at August 31, 2024.

average years

5 unchanged sentences

$ 3.01 to $ 3.02

The aggregate intrinsic value of vested stock options (the market value less the exercise price) at May 31, 2024 was $Nil (2023 - $Nil) and the aggregate intrinsic value of exercised options for the six-month period ending May 31, 2024 was $Nil (2023 - $Nil).

The aggregate intrinsic value of vested stock options (the market value less the exercise price) at August 31, 2024 was $Nil (2023 - $Nil) and the aggregate intrinsic value of exercised options for the nine-month period ending August 31, 2024 was $Nil (2023 - $Nil).

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, a Non-Executive Director Deferred Share Unit Plan (“DSU Plan”), and a Non-Executive Directors Fixed Deferred Share Unit Plan (“Fixed 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, DSU Plan and Fixed DSU Plan will be 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.

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, 2024 is as follows:

Trilogy Metals Inc.

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

Notes to the Condensed Interim Consolidated Financial Statements

A summary of the Company’s unit plans and changes during the nine-month period ending August 31, 2024 is as follows:

Number of RSUs

5 unchanged sentences

Balance – end of the period

For the six-month period ending May 31, 2024, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $ 1.6 million (2023 - $ 1.8 million), net of estimated forfeitures.

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

Trilogy Metals Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three-month period ending August 31, 2024, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $ 0.2 million (2023 - $ 0.2 million), net of estimated forfeitures.

For the nine-month period ending August 31, 2024, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $ 1.8 million (2023 - $ 2.0 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, 2024 is limited to the Canadian dollar balances consisting of cash of approximately CDN$ 19,000 , accounts receivable of approximately CDN$ 20,000 and accounts payable of approximately CDN$ 295,000 .

The Company’s exposure to currency risk at August 31, 2024 is limited to the Canadian dollar balances consisting of cash of approximately CDN$ 11,000 , accounts receivable of approximately CDN$ 11,000 and accounts payable of approximately CDN$ 34,000 .

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 $ 1,000 .

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, 2024.

The Company holds cash with a Canadian chartered financial institution of which the majority is uninsured as at August 31, 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 May 31, 2024 are as follows:

in thousands of dollars

Accounts payable and accrued liabilities

Included in accounts payable and accrued liabilities approximately $ 153,000 is for accrued salaries that were settled, subsequent to the end of the second quarter, on June 3, 2024, by the way of a grant of RSUs which was paid out through the issuance of common shares of the Company (note 8).

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

For the Quarter Ended August 31, 2024

Trilogy Metals Inc.

Notes to the Condensed Interim Consolidated Financial Statements

Contractually obligated undiscounted cash flow requirements as at August 31, 2024 are as follows:

in thousands of dollars

Accounts payable and accrued liabilities

Included in accounts payable and accrued liabilities approximately $ 153,000 is for accrued salaries that were settled, subsequent to the end of the third quarter, on September 3, 2024, by the way of a grant of RSUs which was paid out through the issuance of common shares of the Company (note 8).

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, 2024, 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, 2024 of approximately $ 25 million, a 1 % change in interest rates would result in a change of approximately $ 250,000 over a one year period, 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;

1 unchanged sentence

8) Subsequent events

On June 3, 2024, pursuant to previous elections, the Board of Directors were granted 168,187 DSUs in settlement of approximately $ 82,668 of director fees and senior management were granted 326,020 RSUs in lieu of cash salaries of approximately $ 153,000 , 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.

On June 10, 2024, Trilogy received $ 12.5 million from Ambler Metals returning excess cash to the owners.

On September 3, 2024, pursuant to previous elections, the Board of Directors were granted 153,035 DSUs in settlement of approximately $ 78,250 of director fees and senior management were granted 298,263 RSUs in lieu of cash salaries of approximately $ 153,000 , all vesting immediately.

The grants were in support of continued cash preservation efforts.

Trilogy Metals Inc.

For the Quarter Ended May 31, 2024

For the Quarter Ended August 31, 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