What changed in this filing

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Item 9A. Controls and Procedures

2025-02-14 compared with 2024-02-09 · 74 added, 79 removed, 420 unchanged (27% of the section changed)

87 unchanged sentences

Amended and Restated Limited Liability Company Agreement of Ambler Metals LLC dated February 11, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 18, 2020)

NovaCopper Inc.

2012 Restricted Share Unit Plan (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K filed on February 12, 2013)

NovaCopper Inc.

2012 Deferred Share Unit Plan (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K filed on February 12, 2013, File No.

Form of NovaCopper Inc.

Stock Option Agreement (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-8 filed on April 27, 2012)

NovaCopper Inc.

Equity Incentive Plan (incorporated by reference to Schedule G of Exhibit 99.1 to the Company’s Registration Statement on Form 40-F filed on March 1, 2012)

Trilogy Metals Inc.

2012 Restricted Share Unit Plan (incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form S-8 filed on November 18, 2024)

Trilogy Metals Inc.

2012 Deferred Share Unit Plan (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed on November 18, 2024)

Form of Trilogy Metals Inc.

Equity Incentive Plan Agreement

Trilogy Metals Inc.

Equity Incentive Plan (incorporated by reference to Exhibit 99.3 to the Company’s Registration Statement on Form S-8 filed on November 18, 2024)

Employment Agreement, dated April 20, 2020, between the Company and Tony Giardini (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 20, 2020)

1 unchanged sentence

Equity Incentive Plan for Ambler Metals LLC Officers and Employees (incorporated by reference to the Revised Appendix D to the Company’s proxy statement filed April 30, 2021)

2024 Non-Employee Directors Fixed Deferred Share Unit Plan (incorporate by reference to the Company’s Registration Statement on Form S-8 filed on May 23, 2024)

Registrant’s Insider Trading Policy effective December 19, 2019

Subsidiaries of the Registrant

Consent of PricewaterhouseCoopers LLP

Consents of PricewaterhouseCoopers LLP

Consent of Richard Gosse

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Consent of Brown and Caldwell

Consent of Core Geoscience LLC.

Consent of International Metallurgical & Environmental

Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)

3 unchanged sentences

Arctic Project S-K 1300 Technical Report Summary, Ambler Mining District, Alaska (incorporated by reference to the Company’s Current Report on Form 8-K filed on February 14, 2023)

Technical Report Summary on the Initial Assessment of the Bornite Mineral Resource, Northwest Alaska, USA (incorporated by reference to the Company’s Current Report on Form 8-K filed on February 14, 2023)

S-K 1300 Technical Report Summary on the Initial Assessment of the Bornite Project, Northwest Alaska, USA” dated November 30, 2024 (incorporated by reference to the Company’s Current Report on Form 8-K filed on February 13, 2025)

Incentive Compensation Recovery Policy

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Opinion on the Financial Statements

We have audited the accompanying balance sheets of Ambler Metals LLC (the Company) as of November 30, 2023 and 2022, and the related statements of loss and comprehensive loss, changes in members' equity and cash flows for each of the three years in the period ended November 30, 2023, including the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying balance sheets of Ambler Metals LLC (the Company) as of November 30, 2024 and 2023, and the related statements of loss and comprehensive loss, of changes in members’ equity and of cash flows for each of the three years in the period ended November 30, 2024, including the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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We conducted our audits of these financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the board (acting in a role equivalent to an audit committee) and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment indicator assessment of mineral properties

As described in Notes 2 and 5 to the financial statements, management assesses the possibility of impairment in the carrying value of mineral properties whenever events or changes in circumstances indicate that the carrying value may not be recoverable (impairment indicators).

The carrying value of the Company's mineral properties was $30.9 million as of November 30, 2023.

Management applies judgment to assess whether events or changes in circumstances indicate the carrying value of an asset may not be recoverable, giving rise to the requirement to conduct an impairment test.

Events or changes in circumstances that could trigger an impairment test include (i) significant adverse changes in the business climate including significant decreases in copper, zinc, and other metal prices, or significant adverse changes in legal factors, (ii) an accumulation of costs significantly in excess of the amount originally expected for the construction of the mineral properties, and (iii) significant decreases in the market prices of the mineral properties.

The principal considerations for our determination that performing procedures relating to the impairment indicator assessment of mineral properties is a critical audit matter are that there was judgment by management when assessing whether there were impairment indicators related to the Company's mineral properties, specifically in regards to assessing whether there were:

(i) significant adverse changes in the business climate including significant decreases in copper, zinc, and other metal prices, or significant adverse changes in legal factors, (ii) an accumulation of costs significantly in excess of the amount originally expected for the construction of the mineral properties, (iii) significant decreases in the market prices of the mineral properties.

This in turn led to a high degree of auditor judgment and subjectivity in performing procedures to evaluate audit evidence relating to the judgment made by management in their assessment of impairment indicators that could give rise to the requirement to conduct an impairment test, and (iv) the audit effort involved the use of professionals with specialized skill and knowledge.

Mineral properties impairment analysis

As described in Notes 2 and 5 to the financial statements, the carrying amount of the Company’s mineral properties was $30.9 million as of November 30, 2024.

The Company’s members assess the possibility of impairment in the carrying value of long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of the asset or asset group may not be recoverable.

During the year ended November 30, 2024, the Company’s members identified indicators of impairment due to adverse changes in the regulatory environment impacting the mineral properties, and therefore tested the carrying value of the mineral properties for impairment.

The Company’s members estimated a range of recoverable amounts for the mineral properties using various techniques that took into account, among other things,

mineral reserve and resource estimates.

The Company’s members apply significant judgment in estimating the recoverable amount of the mineral properties.

The mineral reserve and resource estimates used by the Company’s members in estimating the recoverable amount of the mineral properties are based on information prepared by qualified persons (management’s specialists).

No impairment was recorded as a result of the impairment test.

The principal considerations for our determination that performing procedures relating to the mineral properties impairment analysis is a critical audit matter are:

(i) the significant judgment by the Company’s members, including the use of management’s specialists, in determining the recoverable amount of the mineral properties, which in turn led to (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate audit evidence relating to the recoverable amount of the mineral properties, including assessing the reasonability of the mineral reserve and resource estimates developed by management, developing an independent in situ value per pound of copper equivalent for the mineral properties, and project-specific characteristics;

and (iii) the audit effort also involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

These procedures included, among others, (i) evaluating whether there were significant adverse changes in the business climate including significant decreases in copper, zinc, and other metal prices by considering external market and industry data, (ii) evaluating whether there were significant adverse changes in legal factors with respect to title matters by obtaining on a sample basis evidence to support the rights to the mineral properties, (iii) with the assistance of professionals with specialized skill and knowledge evaluating whether there were significant decreases in the market prices of the mineral properties by considering the implied in situ value of recent market transactions of comparable mineral properties, and (iv) evaluating whether there was an accumulation of costs significantly in excess of the amount originally expected for the construction of the mineral properties, or other factors that may indicate that the carrying values of the mineral properties may not be recoverable, through consideration of evidence obtained in other areas of the audit.

These procedures included, among others (i) developing independent point estimates of the recoverable amount of the mineral properties based on an estimated in situ value per pound of copper equivalent, and (ii) comparing the independent point estimates to management’s estimates to evaluate the reasonableness of management’s estimates.

Professionals with specialized skill and knowledge were used to assist in the determination of the in situ value per pound of copper equivalent based on comparable market transactions taking into account project-specific characteristics and the assessment of the reasonability of the recoverable amount of the mineral properties.

For project-specific characteristics, we evaluated evidence of actions taken and statements made by legislators in support of mineral resource development in the jurisdiction of the underlying mineral property assets.

The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of the mineral reserve and resource estimates.

As a basis for using this work, the specialists’ qualifications were understood and the Company’s relationship with the specialists was assessed.

The procedures performed also included evaluating the methods and assumptions used by the specialists, testing the data used by the specialists, and evaluating the specialists’ findings.

/s/PricewaterhouseCoopers LLP

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Accounts payable and accrued liabilities (note 6,8)

Current lease liabilities (note 7)

Current portion of lease liabilities (note 7)

Total current liabilities

Long term lease liabilities (note 7)

Long term portion of lease liabilities (note 7)

Total liabilities

2 unchanged sentences

Owner contribution - Trilogy

Owner distributions - South32

Owner distributions - Trilogy

Accumulated deficit

22 unchanged sentences

South32 owner contribution

Trilogy owner distribution

South32 owner distribution

Total members' equity

Balance - November 30, 2021

Owner contributions

Loss for the year

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Owner contributions

Owner distributions

Loss for the year

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Change in working capital

Increase in deposits and prepaids

Decrease (increase) in deposits and prepaids

Decrease (increase) in accounts receivable and other assets

Increase (decrease) in accounts payable and accrued liabilities

Decrease in accounts payable and accrued liabilities

Interest earned on South32 loan

3 unchanged sentences

Cash contribution by South32

Cash from financing activities

Cash distribution to South32

Cash distribution to Trilogy

Cash (used in) from financing activities

Cash flows from (used in) investing activities

4 unchanged sentences

Cash from investing activities

Increase (decrease) in cash

(Decrease) Increase in cash

Cash - beginning of the year

35 unchanged sentences

GAAP”) on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

These financial statements have been prepared pursuant to Rule 3-09 of SEC Regulation S-X for inclusion in Trilogy’s 10-K/A, as the Company is an equity investee of Trilogy.

These financial statements have been prepared pursuant to Rule 3-09 of SEC Regulation S-X for inclusion in Trilogy’s 10-K, as the Company is an equity investee of Trilogy.

Summary of significant accounting policies

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Individual receivables are written off when management deem them to be uncollectible.

Further details on credit risk are disclosed in note 9.

Other financial liabilities include accounts payable and accrued liabilities.

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The functional currency of the Company and the Company’s reporting currency is the United States dollar.

As of November 30, 2023, included in cash is $0.2 million (2022 - $0.3 million) denominated in Canadian dollars and $63.6 million (2022 - $80.5 million) denominated in United States dollars.

As at November 30, 2024, the Company did not hold currency denominated in Canadian dollars (2023 - $0.3 million) and held $7.5 million (2023 - $63.6 million) denominated in United States dollars.

The Company holds cash with a single US Financial Institution and the majority of the cash is uninsured.

19 unchanged sentences

November 30, 2024

On February 11, 2020, the Ambler lands in Northwest Alaska, which contains the copper-zinc-lead-gold-silver Arctic Project and other mineralized targets within the volcanogenic massive sulfide belt, were contributed to Ambler Metals LLC pursuant to the Contribution Agreement.

The Ambler lands are subject to a 1% net smelter return (“NSR”) royalty that can be purchased at any time for a one-time payment of $10 million.

There were no mineral property additions during the period ended November 30, 2023.

On February 11, 2020, the exclusive right to explore and the non-exclusive right to access and enter on the Bornite lands, and lands deeded to NANA Regional Corporation, Inc.

(“NANA”) through the Alaska Native Claims Settlement Act, located adjacent to the Ambler lands in Northwest Alaska, were contributed to Ambler Metals LLC pursuant to the Contribution Agreement.

Upon a decision to proceed with construction of a mine on the Ambler or Bornite lands, NANA maintains the right to purchase between a 16%-25% ownership interest in the mine or retain a 15% net proceeds royalty which is payable after Ambler Metals LLC has recovered certain historical costs, including capital and cost of capital.

Should NANA elect to

On October 19, 2011, Trilogy acquired (subsequently contributed to the Company pursuant to the Contribution Agreement) the exclusive right to explore and the non-exclusive right to access and enter on the Bornite lands, and lands deeded to NANA Regional Corporation, Inc.

(“NANA”) through the Alaska Native Claims Settlement Act, located adjacent to the Ambler lands in Northwest Alaska.

Upon a decision to proceed with construction of a mine on the Ambler or Bornite lands, NANA will maintain the right to purchase between a 16%-25% ownership interest in the mine or retain a 15% net proceeds royalty which is payable after Ambler has recovered certain historical costs, including capital and cost of capital.

Should NANA elect to purchase an ownership interest, consideration will be payable equal to all historical costs incurred on the properties at the elected percentage, not to be less than zero.

The parties would form a joint venture and be responsible for all future costs, including capital costs of the mine based on their pro-rata share.

NANA would also be granted a net smelter return royalty of between 1% and 2.5% upon the execution of a mining lease or a surface use agreement, the amount of which is determined by the classification of land from which production originates.

Ambler Metals LLC

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dollars, unless otherwise noted

purchase an ownership interest, consideration will be payable equal to all historical costs incurred on the properties at the elected percentage, not to be less than zero.

The parties would form a joint venture and be responsible for all future costs, including capital costs of the mine based on their pro-rata share.

LLC pursuant to the Contribution Agreement.

The Ambler lands are subject to a 1% net smelter return (“NSR”) royalty that can be purchased at any time for a one-time payment of $10 million.

There were no mineral property additions during the period ended November 30, 2024.

On February 11, 2020, the exclusive right to explore and the non-exclusive right to access and enter on the Bornite lands, and lands deeded to NANA Regional Corporation, Inc.

(“NANA”) through the Alaska Native Claims Settlement Act, located adjacent to the Ambler lands in Northwest Alaska, were contributed to Ambler Metals LLC pursuant to the Contribution Agreement.

c) Mineral properties expense

The following table summarizes mineral properties expense incurred for the year ended November 30, 2023, November 30, 2022 and November 30, 2021.

Lease expense for the warehouse previously classified as general and administrative of approximately $81 thousand for the years ended November 30, 2021 were reclassified to mineral property expense under project support in order to align with the current period presentation.

The following table summarizes mineral properties expense incurred for the years ended November 30, 2024, 2023 and 2022.

in thousands of US dollars

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Mineral property expense

d) Impairment testing

During the year the Company’s members identified an impairment indicator as result of the United States Bureau of Land Management (“BLM”) preferred "No Action" alternative published in the BLM's Final Supplemental Environmental Impact Statement (“SEIS”) for the Ambler Access Project and the BLM's Record of Decision confirming the no action alternative.

Accordingly, the Company’s members performed impairment tests estimating the recoverable amount of the mineral properties using various techniques.

No impairment was identified.

Accounts payable and accrued liabilities

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The headquarters and warehouse leases are operating leases ending in 2025 and 2024, respectively.

There is an option to renew for both lease agreements.

There is an option to renew both lease agreements.

The warehouse lease was not renewed and allowed to expire on July 31, 2024.

Lease expense for the headquarters is recorded within general and administrative expense and for the warehouse is recorded within mineral property expense and was comprised of the following components:

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Variable lease costs consist primarily of the Company’s portion of common area maintenance fees including taxes.

As of November 30, 2023, the remaining lease term was 25 months for the headquarters office and 8 months for the warehouse.

As of November 30, 2024, the remaining lease term was 13 months for the headquarters office.

Supplemental cash and non-cash information relating to our leases during the period ended November 30, 2024, are as follows:

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Related party transactions

During the year ended November 30, 2023, the Company incurred $39 thousand related to support from Trilogy (2022 – $nil), $27 thousand was paid and the remaining $12 thousand were included in accounts payable and accrued liabilities.

During the year ended November 30, 2023, the Company earned interest of $nil (2022 - $0.6 million) from South32.

Financial risk management

(a) Currency risk

Currency risk is the risk of a fluctuation in financial asset and liability settlement amounts due to a change in foreign exchange rates.

The Company operates in the United States and holds a bank account denominated in Canadian currency to facilitate payments to Canadian vendors, as necessary.

The Company’s exposure to the currency risk at November 30, 2023 is limited to the Canadian dollar balances consisting of cash of approximately CDN $250 thousand and accounts payable of CDN $36 thousand.

Based on a 10% change in the US-Canadian exchange rate, assuming all other variables remain constant, the Company’s net change would be approximately $17 thousand.

(b) Credit risk

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 single US Financial Institution.

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

The majority of the Company’s cash held at November 30, 2023 is uninsured.

The Company does not consider any of its financial assets to be impaired as of November 30, 2023.

Liquidity risk is the risk that the Company will encounter difficulties raising funds to meet its financial obligations as they fall due.

The Company is in the exploration stage and does not have cash inflows from operations;

therefore, the Company manages liquidity risk through the terms of the LLC Agreement.

Ambler Metals LLC

Notes to Financial Statements

expressed in U.S.

dollars, unless otherwise noted

Contractually obligated cash flow requirements as of November 30, 2023 are as follows:

in thousands of US dollars

Accounts payable and accrued liabilities

Warehouse and office lease

(d) Interest rate risk

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

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

Based on cash balances as of November 30, 2023, a 1% change in interest rates would result in a negligible change in cash, over a 12-month 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;

however, the ability for our Owners to obtain long-term financing and its economic viability could be affected by commodity price volatility.

During the year ended November 30, 2024, pursuant to a service agreement with Trilogy, the Company paid $63 thousand (2023 - $Nil) related to administration and accounting services and $68 thousand (2023 - $27 thousand) related to operating expenses paid on behalf of the Company.

Commitments and contingencies

The Company has commitments with respect to a warehouse and office lease requiring future minimum lease payments as summarized in note 7.

The Company has commitments with respect to an office lease requiring future minimum lease payments as summarized in note 7.

Members’ equity

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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-K

Item 9A. Controls and Procedures