Item 9A. Controls and Procedures
Item 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted by the Company under U.S. and Canadian securities legislation is recorded, processed, summarized and reported within the time periods specified in those rules, including providing reasonable assurance that material information is gathered and reported to senior management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to permit timely decisions regarding public disclosure. Management, including the CEO and CFO, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) and15d-15(e) of the Exchange Act and the rules of Canadian Securities Administrators, as at November 30, 2024. Based on this evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective as at November 30, 2024.
Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act and National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim filings. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management has used the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013) to evaluate the effectiveness of the Company’s internal control over financial reporting. Based on this assessment, management has concluded that as at November 30, 2024, the Company’s internal control over financial reporting was effective.
Attestation Report of the Registered Public Accounting Firm
This Annual Report does not include an attestation report of the company’s registered public accounting firm regarding internal controls over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to law, rules and regulations that permit us to provide only management’s report in this Annual Report.
Changes in Internal Controls
There has been no change in our internal control over financial reporting during fiscal year ended November 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. OTHER INFORMATION
N o n e .
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information in our 2025 Proxy Statement regarding directors and executive officers and Section 16 reporting information appearing under the headings “Election of Directors” and “Information Concerning the Board of Directors and Executive Officers” is incorporated by reference in this section. The information under the heading “Executive Officers of Trilogy” in Part I, Item 1 of this Form 10-K is also incorporated by reference in this section. The information in our 2025 Proxy Statement regarding our Code of Business Conduct and Ethics under the subheading “Ethical Business Conduct” under “Statement of Corporate Governance Practices” is also incorporated by reference in this section. Finally, the information in our 2025 Proxy Statement regarding the Audit Committee under the heading “Statement of Corporate Governance Practices” is incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
The information appearing in our 2025 Proxy Statement under the headings “Compensation Committee Interlocks and Insider Participation”, “Statement of Executive Compensation”, and “Director Compensation” is incorporated by reference in this section.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information appearing in our 2025 Proxy Statement under the heading “Securities Authorized For Issuance Under Equity Compensation Plans” (which is also contained in this report in Part II, Item 5) and the information under the heading “Security Ownership Of Certain Beneficial Owners And Management And Related Shareholder Matters” is incorporated herein by reference.
Securities Authorized for Issuance under Equity Compensation Plans
The following table is as of November 30, 2024.
Plan category
Number of securities to be issued
upon exercise of outstanding
options, warrants and rights
Weighted-average exercise price of
outstanding options, warrants and
rights
Number of securities remaining
available for future issuance under
equity compensation plans
(excluding securities reflected in
column (a))
(a)
(b)
(c)
Equity compensation plans approved by security holders
19,556,985
$
1.07
4,605,811
Equity compensation plans not approved by security holders
—
—
—
Total
19,556,985
$
1.07
4,605,811
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information appearing in our 2025 Proxy Statement under the heading “Independence of Directors” under the heading “Information Concerning the Board of Directors and Executive Officers” and under the heading “Statement of Corporate Governance Practices” is incorporated herein by reference.
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Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information appearing in our 2025 Proxy Statement regarding Audit Fees, Audit-Related Fees, Tax Fees, All Other Fees and Audit Committee Pre-Approval Policies under the subheading “Appointment of Auditors” is incorporated herein by reference.
PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents Filed With This Report
1. FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 271 )
110
Consolidated Balance Sheets
112
Consolidated Statements of Loss and Comprehensive Loss
113
Consolidated Statements of Shareholders ’ Equity
114
Consolidated Statements of Cash Flows
115
Notes to Consolidated Financial Statements
116
2. FINANCIAL STATEMENT SCHEDULES
None.
3. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
Employment Agreement between the Registrant and Tony Giardini, dated April 20, 2020, identified in exhibit list below.
Employment Agreement between the Registrant and Elaine Sanders, dated November 5, 2012, identified in exhibit list below.
NovaCopper Inc. Equity Incentive Plan identified in exhibit list below.
Form of NovaCopper Inc. Stock Option Agreement identified in exhibit list below.
NovaCopper Inc. 2012 Restricted Share Unit Plan identified in exhibit list below.
Form of NovaCopper Inc. 2012 Restricted Share Unit Award Agreement identified in exhibit list below.
NovaCopper Inc. 2012 Deferred Share Unit Plan identified in exhibit list below.
Form of NovaCopper Inc. Deferred Share Unit Award Agreement identified in exhibit list below.
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(b) Exhibits
Exhibit
No.
Description
2.1
Contribution Agreement, dated February 11, 2020, between NovaCopper US Inc., Trilogy Metals Inc. and Ambler Metals LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 18, 2020)
3.1
Certificate of Incorporation (incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form 40-F filed on March 1, 2012)
3.2
Articles of Trilogy Metals Inc., effective April 27, 2011, as altered March 20, 2011 (incorporated by reference to Exhibit 99.3 to Amendment No. 1 to the Company ’ s Registration Statement on Form 40-F filed on April 19, 2012)
3.3
Notice of Articles and Certificate of Name Change, dated September 1, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 8, 2016)
4.1
Description of Common Stock (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed on February 13, 2020)
10.1
Net Smelter Returns Royalty Agreement, dated effective January 7, 2010, among Kennecott Exploration Company, Kennecott Arctic Company, Alaska Gold Company, and NovaGold Resources Inc. (incorporated by reference to Exhibit 99.1 to the Company’s Report on Form 6-K filed on April 25, 2012)
10.2
Exploration Agreement and Option to Lease, dated October 19, 2011, between NovaCopper US Inc. and NANA Regional Corporation, Inc. (incorporated by reference to Exhibit 99.1 to the Company’s Report on Form 6-K filed on April 25, 2012)
10.3
Option Agreement to Form Joint Venture, dated April 10, 2017, among the Company, NovaCopper US Inc. and South32 Group Operations Pty Ltd. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K/A filed on April 20, 2017)
10.4
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)
10.5
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)
10.6
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)
10.7
Form of Trilogy Metals Inc. Equity Incentive Plan Agreement
10.8
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)
10.9
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)
10.10
Employment Agreement, dated November 5, 2012, between the Company and Elaine Sanders (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form 10-K filed on February 12, 2013)
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10.11
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)
10.12
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)
19.1
Registrant’s Insider Trading Policy effective December 19, 2019
21.1
Subsidiaries of the Registrant
23.1
Consents of PricewaterhouseCoopers LLP
23.2
Consent of Richard Gosse
23.3
Consent of Wood Canada Limited
23.4
Consent of Ausenco Engineering Canada ULC.
23.5
Consent of SRK Consulting (Canada) Inc.
23.6
Consent of Brown and Caldwell
23.7
Consent of Core Geoscience LLC.
23.8
Consent of International Metallurgical & Environmental
31.1
Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)
31.2
Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
32.1
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350
96.1
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)
96.2
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)
97.1
Incentive Compensation Recovery Policy
101
The following materials from Trilogy Metals Inc.’s Annual Report on Form 10-K for the year ended November 30, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, (vi) the Notes to the Consolidated Financial Statements, and (vii) Schedule II – Valuation and Qualifying Accounts.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
(c) Financial Statement Schedules
Schedule A – The Financial Statement of Ambler Metals LLC as of November 30, 2024
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Schedule A
Report of Independent Registered Public Accounting Firm
To the Board of Ambler Metals LLC
Opinion on the Financial Statements
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
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
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 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
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 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.
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,
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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) 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
Chartered Professional Accountants
Vancouver, Canada
February 13, 2025
We have served as the Company's auditor since 2020.
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Ambler Metals LLC
Balance Sheet
As at November 30, 2024 and 2023
in thousands of US dollars
November 30, 2024
$
November 30, 2023
$
Assets
Current assets
Cash (note 3)
7,472
63,829
Deposits and prepaid
764
1,256
Accounts receivables and other assets
—
11
Total current assets
8,236
65,096
Right of use asset (note 7)
191
413
Property, plant and equipment (note 4)
635
772
Mineral properties (note 5)
30,899
30,899
Total assets
39,961
97,180
Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 6,8)
559
2,500
Current portion of lease liabilities (note 7)
186
229
Total current liabilities
745
2,729
Long term portion of lease liabilities (note 7)
16
202
Total liabilities
761
2,931
Members' equity
Owner contribution - South 32
145,273
145,162
Owner contribution - Trilogy
31,479
31,368
Owner distributions - South32
(25,000)
—
Owner distributions - Trilogy
(25,000)
—
Accumulated deficit
(87,552)
(82,281)
Total members' equity
39,200
94,249
Total liabilities and members' equity
39,961
97,180
(See accompanying notes to the financial statements)
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Ambler Metals LLC
Statement of Loss and Comprehensive Loss
For the Years Ended November 30
in thousands of US dollars
2024
$
2023
$
2022
$
Expenses
Depreciation
137
150
113
Corporate salaries and wages
440
2,068
1,664
General and administrative
504
547
738
Mineral property expense (note 5)
4,098
12,822
32,083
Professional fees
1,122
547
792
Foreign exchange (gain)/loss
2
(2)
15
Total expenses
6,303
16,132
35,405
Other items
Interest income
(1,027)
(416)
(686)
Other income
(5)
(29)
—
Loss and comprehensive loss for the year
5,271
15,687
34,719
(See accompanying notes to the financial statements)
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Ambler Metals LLC
Statement of Changes in Members’ Equity
For the Years Ended November 30
In thousands of US dollars, except share amounts
Number of units outstanding
Trilogy owner contribution
$
South32 owner contribution
$
Trilogy owner distribution
$
South32 owner distribution
$
Deficit
$
Total members' equity
$
Balance - November 30, 2021
2,000,000
31,206
145,000
—
—
(31,875)
144,331
Owner contributions
—
51
51
—
—
—
102
Loss for the year
—
—
—
—
—
(34,719)
(34,719)
Balance - November 30, 2022
2,000,000
31,257
145,051
(66,594)
109,714
Owner contributions
—
111
111
—
—
—
222
Loss for the year
—
—
—
—
—
(15,687)
(15,687)
Balance - November 30, 2023
2,000,000
31,368
145,162
—
—
(82,281)
94,249
Owner contributions
—
111
111
—
—
—
222
Owner distributions
—
—
—
(25,000)
(25,000)
—
(50,000)
Loss for the year
—
—
—
—
—
(5,271)
(5,271)
Balance - November 30, 2024
2,000,000
31,479
145,273
(25,000)
(25,000)
(87,552)
39,200
(See accompanying notes to the financial statements)
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Ambler Metals LLC
Statement of Cash Flows
For the Years Ended November 30
in thousands of US dollars
November 30, 2024
$
November 30, 2023
$
November 30, 2022
$
Cash flows from (used in) operating activities
Loss for the year
(5,271)
(15,687)
(34,719)
Depreciation
137
150
113
Lease expense
239
265
264
Lease payments
(246)
(267)
(263)
Equity contribution by Trilogy
111
111
51
Change in working capital
Decrease (increase) in deposits and prepaids
492
(442)
(193)
Decrease (increase) in accounts receivable and other assets
16
(3)
(6)
Decrease in accounts payable and accrued liabilities
(1,946)
(1,164)
(484)
Interest earned on South32 loan
—
—
(628)
Interest received on South32 loan
—
—
740
Cash used in operating activities
(6,468)
(17,037)
(35,125)
Cash flows from (used in) financing activities
Cash contribution by South32
111
111
51
Cash distribution to South32
(25,000)
—
—
Cash distribution to Trilogy
(25,000)
—
—
Cash (used in) from financing activities
(49,889)
111
51
Cash flows from (used in) investing activities
Principle payment on South32 loan
—
—
55,244
Property Staking
—
—
(142)
Machinery and equipment
—
—
(321)
Vehicles
—
—
(47)
Furniture and equipment
—
—
(110)
Cash from investing activities
—
—
54,624
(Decrease) Increase in cash
(56,357)
(16,926)
19,550
Cash - beginning of the year
63,829
80,755
61,205
Cash - end of the year
7,472
63,829
80,755
(See accompanying notes to the financial statements)
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Ambler Metals LLC
Notes to Financial Statements
expressed in U.S. dollars, unless otherwise noted
1. Organization & basis of presentation
Ambler Metals LLC (the “Company” or “Joint Venture”), a Delaware limited liability company, is a 50-50 joint venture between NovaCopper US Inc., a wholly owned subsidiary of Trilogy Metals Inc. (collectively “Trilogy”), and South32 USA Exploration Inc., a wholly owned subsidiary of South32 Limited (collectively “South32”).
The Company is engaged in the exploration and development of mineral properties 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” or “USA”).
On February 11, 2020, pursuant to a contribution agreement among Trilogy, South32 and the Company (the “Contribution Agreement”), Trilogy contributed to the Company all of Trilogy’s assets associated with the Upper Kobuk Mineral Projects ("UKMP") located in northwest Alaska in exchange for a 50% membership interest in the Company. Simultaneously, South32 contributed $145 million cash in exchange for a 50% membership interest in the Company.
The operations and governance of the Joint Venture are provided for in the Company’s Limited Liability Company Agreement dated February 11, 2020 (the “LLC Agreement”).
The mining rights, deposits and property, plant and equipment contributed to the Company from Trilogy are recognized at Trilogy’s historical carrying value on the date of contribution. The contributions, including noncash contributions, made to the Company by each respective member on February 11, 2020 were as follows:
Respective contributions to the Joint Venture
in thousands of US dollars
$
Intangible assets:
Mining rights
30,587
Trilogy contributed intangible assets
30,587
Tangible assets:
Deposits
1
Property, plant and equipment
618
Trilogy contributed tangible assets
619
Cash
145,000
South32 contributed cash
145,000
Total capital contributed at inception
176,206
As a result of these transactions, Trilogy and South32 each have equal interests in the Company and have equal representation on the Board of the Company.
Following the formation of the Joint Venture, on March 17, 2020 the Company loaned South32 $57.5 million secured by South32’s membership interest in Ambler Metals and guaranteed by South32 International Investment Holdings Pty Ltd., a wholly owned subsidiary of South32. The loan had a 7-year maturity date and was recorded at amortized cost. The loan repayment terms were such that quarterly payments became due from South32 on a quarterly basis beginning in 2Q 2021 based on forecasted expenditures. On June 21, 2022, South32 paid the full balance of the loan.
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Ambler Metals LLC
Notes to Financial Statements
expressed in U.S. dollars, unless otherwise noted
The financial statements have been prepared by management in conformity with generally accepted accounting principles in the United States (“U.S. 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, as the Company is an equity investee of Trilogy.
2. Summary of significant accounting policies
Property, plant and equipment
Plant and equipment are recorded at cost and depreciation begins when the asset is put into service. Depreciation is calculated on a straight-line basis over the respective assets’ estimated useful lives. Depreciation periods by asset class are:
Computer hardware and software
3 years
Machinery and equipment
3 - 10 years
Furniture and equipment
5 - 10 years
Vehicles
3 years
Leasehold improvements
lease term
Mineral properties and development costs
All direct costs related to the acquisition of mineral property interests are capitalized. Mineral property exploration expenditures are expensed when incurred. When it has been established that a mineral deposit is commercially mineable, an economic analysis has been completed and permits are obtained, the costs subsequently incurred to develop a mine on the property prior to the start of mining operations are capitalized. Capitalized costs will be amortized following commencement of production using the unit of production method over the estimated life of proven and probable reserves.
Impairment of long-lived assets
Management assesses 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. Management applies judgment to assess impairment indicators that could give rise to the requirement to conduct a formal impairment test. Events and circumstances that could trigger an impairment test include, but are not limited to, significant adverse changes in the business climate including significant decreases to copper, zinc and other metal prices or significant adverse changes in legal factors, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the long-lived asset, and significant decreases in the market prices for long-lived assets. 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.
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Ambler Metals LLC
Notes to Financial Statements
expressed in U.S. dollars, unless otherwise noted
Leases
We determine if a contractual arrangement represents or contains a lease at inception. Operating leases are included in right of use assets and lease liabilities on our balance sheet. Assets under finance leases are included in property, plant and equipment and the related lease liabilities in lease liabilities on our balance sheet.
Operating and finance lease right of use assets and lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. When the rate implicit to the lease cannot be readily determined, we utilize the incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is the rate of interest our Company would have to pay to borrow on a collateralized basis over a similar term and the amount equal to the lease payments in a similar economic environment.
The operating lease expenses are recognized on a straight-line basis over the lease term.
Income taxes
The Company is not a taxable entity for income tax purposes. Accordingly, no recognition is given to income taxes for financial reporting purposes. Tax on the net income (loss) of the Company is borne by the owners through the allocation of taxable income (loss). Net income for financial statement purposes may differ significantly from taxable income for the owners as a result of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under the shareholders agreement.
Financial instruments
Loans and receivables are recorded initially at fair value, net of transaction costs incurred, and subsequently at amortized cost using the effective interest rate method. Loans and receivables consist of cash, deposits, and loans receivable. Estimated future credit losses are based on historical credit loss experience and forward-looking considerations. Individual receivables are written off when management deem them to be uncollectible.
Other financial liabilities include accounts payable and accrued liabilities.
Translation of foreign currencies
Foreign denominated monetary assets and liabilities are translated into United States dollars at the exchange rate in effect at the balance sheet date, and non-monetary assets and liabilities at the exchange rate in effect at the time of acquisition or issue. Income and expenses are translated at rates approximating the exchange rate in effect at the time of transactions. Exchange gains or losses arising on translation are included in income or loss for the period.
The functional currency of the Company and the Company’s reporting currency is the United States dollar.
3. Cash
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.
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Ambler Metals LLC
Notes to Financial Statements
expressed in U.S. dollars, unless otherwise noted
4. Property, plant and equipment
A summary of property, plant and equipment as of November 30, 2024 and November 30, 2023, is as follows:
in thousands of US dollars
Machinery and equipment
$
Vehicles
$
Computer hardware and software
$
Furniture and Equipment
$
Total
$
Cost at November 30, 2022
922
114
12
145
1,193
Accumulated Depreciation
(304)
(82)
(12)
(23)
(421)
Net book value at November 30, 2023
618
32
—
122
772
Cost at November 30, 2023
922
115
12
145
1,194
Accumulated Depreciation
(402)
(107)
(12)
(38)
(559)
Net book value at November 30, 2024
520
8
—
107
635
5. Mineral properties
in thousands of US dollars
November 30, 2023
$
Additions
$
November 30, 2024
$
Ambler
26,899
—
26,899
Bornite
4,000
—
4,000
30,899
—
30,899
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.
a) Ambler
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
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Ambler Metals LLC
Notes to Financial Statements
expressed in U.S. dollars, unless otherwise noted
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.
b) Bornite
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 years ended November 30, 2024, 2023 and 2022.
in thousands of US dollars
November 30, 2024
$
November 30, 2023
$
November 30, 2022
$
Ambler Access Project
1,713
8,422
6,822
Community
46
90
219
Drilling
77
323
7,396
Engineering
298
954
2,002
Environmental
133
341
692
Geochemistry and geophysics
9
97
1,172
Land and permitting
893
841
800
Project support
356
430
8,613
Safety and risk
6
20
562
Wages and benefits
567
1,304
3,805
Mineral property expense
4,098
12,822
32,083
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.
6. Accounts payable and accrued liabilities
in thousands of US dollars
November 30, 2024
$
November 30, 2023
$
Accounts payable
177
153
Accrued salaries and vacation
91
1,152
Accrued liabilities
291
1,195
Accounts payable and accrued liabilities
559
2,500
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Ambler Metals LLC
Notes to Financial Statements
expressed in U.S. dollars, unless otherwise noted
7. Leases
(a) Right of use assets
in thousands of US dollars
November 30, 2024
$
November 30, 2023
$
Opening balance
413
651
Amortization
(222)
(238)
Right of use asset
191
413
In December 2020, the Company commenced a lease for their headquarters office in Anchorage, Alaska and recognized the right of use asset approximately $816 thousand. In August 2021, the Company commenced a new lease for a warehouse in Fairbanks, Alaska and recognized the right of use asset of approximately $231 thousand.
(b) Lease liabilities
The headquarters and warehouse leases are operating leases ending in 2025 and 2024, respectively. 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:
in thousands of US dollars
November 30, 2024
$
November 30, 2023
$
Operating lease costs
239
265
Variable lease costs
10
5
Operating lease costs
249
270
Variable lease costs consist primarily of the Company’s portion of common area maintenance fees including taxes.
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:
● Cash paid for amounts included in the measurement of lease liabilities was approximately $246 thousand.
● Non-cash amounts included in the measurement of lease liabilities was $nil.
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Ambler Metals LLC
Notes to Financial Statements
expressed in U.S. dollars, unless otherwise noted
Future minimum payments relating to the lease recognized in our balance sheet as of November 30, 2024 are as follows:
in thousands of US dollars
November 30, 2024
$
2025
207
Total undiscounted lease payments
207
Effects of discounting
(5)
Present value of lease payments recognized as lease liability
202
8. Related party transactions
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.
9. Commitments and contingencies
The Company has commitments with respect to an office lease requiring future minimum lease payments as summarized in note 7.
10. Members’ equity
The Company has been established as a limited liability company. Under the terms of the LLC Agreement, unless otherwise provided for in the LLC Agreement, all membership interests are entitled to the same benefits, rights, duties and obligations and vote on all matters.
The Company is authorized to establish a capital account for each member equal to that member’s initial capital contribution, represented by units. The units are voting and subject to transfer restrictions as defined in the LLC Agreement. As of November 30, 2024 and 2023, the Company had 2 million units, with each of South32 and Trilogy owning 1 million units each, in exchange for the contributions made to the Company at inception.
As described in the LLC Agreement, under certain circumstances a member shall have the right to transfer to any third party all or any part of its Membership Interest or any economic interest, (including its right to receive distributions of cash or property from the Company). Any such transfer is subject to the satisfaction of certain conditions, and the relevant purchase price is determined pursuant to specific formulas, all as set forth in the LLC Agreement.
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Item 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TRILOGY METALS INC.
By:
/s/ Tony Giardini
Name:
Tony Giardini
Title:
President and Chief Executive Officer
Date: February 14, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature
Title
Date
/s/ Tony Giardini
President and Chief Executive Officer
February 14, 2025
Tony Giardini
(Principal Executive Officer) and Director
/s/ Elaine Sanders
Chief Financial Officer (Principal Financial
February 14, 2025
Elaine Sanders
Officer and Principal Accounting Officer)
/s/ James Gowans
Director
February 14, 2025
James Gowans
/s/ William Hayden
Director
February 14, 2025
William Hayden
/s/ William Hensley
Director
February 14, 2025
William Hensley
/s/ Gregory Lang
Director
February 14, 2025
Gregory Lang
/s/ Janice Stairs
Director
February 14, 2025
Janice Stairs
/s/ Diana Walters
Director
February 14, 2025
Diana Walters
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