What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-02 compared with 2024-10-08 · 68 added, 72 removed, 121 unchanged (54% of the section changed)

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Management’s Discussion & Analysis

For the Quarter Ended August 31, 2024

For the Quarter Ended February 28, 2025

(expressed in US dollars)

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These forward-looking statements may include statements regarding the Company’s work programs and budgets;

perceived merit of properties, exploration results and budgets, the impact of the Bureau of Land Management’s (“BLM”) suspension of permits on the right-of-way with the Alaska Industrial Development and Export Authority (“AIDEA”) relating to the Ambler Road Project, the Company and Ambler Metals’ funding requirements, the Company’s cash preservation strategies, the Company’s future funding of Ambler Metals, mineral reserves and resource estimates, work programs, capital expenditures, operating costs, cash flow estimates, production estimates and similar statements relating to the economic viability of a project, timelines, strategic plans, statements regarding Ambler Metals’ plans and expectations relating to its Upper Kobuk Mineral Projects (the “UKMP”, as defined below), sufficiency of the Ambler Metals’ cash to fund the UKMP, impact of COVID-19 on the Company’s operations, market prices for precious and base metals, statements regarding the Ambler Access Project ( also known as the Ambler Mining District Industrial Access Project) , or other statements that are not statements of fact.

perceived merit of properties, exploration results and budgets, the Company and Ambler Metals’ funding requirements, mineral reserves and resource estimates, work programs, capital expenditures, operating costs, cash flow estimates, production estimates and similar statements relating to the economic viability of a project, timelines, strategic plans, statements regarding Ambler Metals’ plans and expectations relating to its Upper Kobuk Mineral Projects (the “UKMP”, as defined below), sufficiency of the Ambler Metals’ cash to fund the UKMP, market prices for precious and base metals, statements regarding the Ambler Access Project ( also known as the Ambler Mining District Industrial Access Project, “AMDIAP”) , or other statements that are not statements of fact.

These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

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Forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, as well as on a number of material assumptions, which could prove to be significantly incorrect, including about:

● our ability to achieve production at the Upper Kobuk Mineral Projects;

● our ability to achieve production at the UKMP;

● the accuracy of our mineral resource and reserve estimates;

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● the adequacy of our financial resources;

Trilogy Metals Inc.

For the Quarter Ended August 31, 2024

● the receipt of third party contractual, regulatory and governmental approvals for the exploration, development, construction and production of our properties and any litigation or challenges to such approvals;

● our expected ability to develop adequate infrastructure and that the cost of doing so will be reasonable;

Trilogy Metals Inc.

For the Quarter Ended February 28, 2025

● continued good relationships with South32, our joint venture partner, as well as local communities and other stakeholders;

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● risks related to lack of infrastructure including but not limited to the risk whether or not the Ambler Mining District Industrial Access Project, or AMDIAP, will receive the requisite permits and, if it does, whether the Alaska Industrial Development and Export Authority will build the AMDIAP;

● risks related to the suspension by the BLM of the right-of-way permits with AIDEA relating to the AMDIAP to permit the Department of the Interior to carry out additional work on the environmental impact statement, and associated delays relating to such suspension;

● risks related to inclement weather which may delay or hinder exploration activities at our mineral properties;

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● none of the Company’s mineral properties are in production or are under development;

Trilogy Metals Inc.

For the Quarter Ended August 31, 2024

● commodity price fluctuations;

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● risks related to increases in demand for equipment, skilled labor and services needed for exploration and development of mineral properties, and related cost increases;

● risks related to increases in costs of fuel and other required supplies and concerns relating to supply chain and the ability to obtain needed supplies at a reasonable cost, or at all;

● risks related to global economic instability, including global supply chain issues, inflation and fuel and energy costs may affect the Company’s business;

Trilogy Metals Inc.

For the Quarter Ended February 28, 2025

● uncertainties relating to the assumptions underlying our resource estimates, such as metal pricing, metallurgy, mineability, marketability and operating and capital costs;

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● the risk that permits and governmental approvals necessary to develop and operate mines at our mineral properties will not be available on a timely basis or at all;

● changes in U.S.

laws and policies regulating international trade, including currently imposed and any future potential tariffs;

● risks related to the need for reclamation activities on our properties and uncertainty of cost estimates related thereto;

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● uncertainty as to the volatility in the price of the Company’s common shares;

Trilogy Metals Inc.

For the Quarter Ended August 31, 2024

● the Company’s expectation of not paying cash dividends;

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● uncertainty as to our ability to maintain the adequacy of internal control over financial reporting as per the requirements of Section 404 of the Sarbanes-Oxley Act;

● increased regulatory compliance costs, associated with rules and regulations promulgated by the United States Securities and Exchange Commission, Canadian Securities Administrators, the NYSE American Stock Exchange, the Toronto Stock Exchange, and the Financial Accounting Standards Boards, and more specifically, our efforts to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Trilogy Metals Inc.

For the Quarter Ended February 28, 2025

● increased regulatory compliance costs, associated with rules and regulations promulgated by the United States Securities and Exchange Commission, Canadian Securities Administrators, the NYSE American Stock Exchange (“NYSE American”), the Toronto Stock Exchange (“TSX”), and the Financial Accounting Standards Boards(“FASB”), and more specifically, our efforts to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act.

This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements.

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This Management’s Discussion and Analysis (“MD&A”) of Trilogy Metals Inc.

(“Trilogy”, “Trilogy Metals”, “the Company” or “we”) is dated October 8, 2024 and provides an analysis of our unaudited condensed interim financial results for the quarter ended August 31, 2024 compared to the quarter ended August 31, 2023.

The following information should be read in conjunction with our August 31, 2024 unaudited condensed interim consolidated financial statements and related notes which were prepared in accordance with United States generally accepted accounting principles (“U.S.

(“Trilogy”, “Trilogy Metals”, “the Company” or “we”) is dated April 2, 2025 and provides an analysis of our unaudited condensed interim financial results for the quarter ended February 28, 2025 compared to the quarter ended February 29, 2024.

The following information should be read in conjunction with our February 28, 2025 unaudited condensed interim consolidated financial statements and related notes which were prepared in accordance with United States generally accepted accounting principles (“U.S.

The MD&A should also be read in conjunction with our audited consolidated financial statements and related notes for the year ended November 30, 2024.

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dollars”, “$” or “US$” are to the currency of the United States.

Richard Gosse, P.Geo., Vice President, Exploration of the Company, is a Qualified Person under National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”), and has approved the scientific and technical information in this MD&A.

Trilogy’s shares are listed on the Toronto Stock Exchange (“TSX”) and the NYSE American Stock Exchange (“NYSE American”) under the symbol “TMQ”.

Additional information related to Trilogy, including our annual report on Form 10-K for the fiscal year ended November 30, 2023, is available on SEDAR+ at www.sedarplus.com and on EDGAR at www.sec.gov.

Trilogy Metals Inc.

For the Quarter Ended August 31, 2024

Richard Gosse, P.Geo., Vice President, Exploration of the Company, is a Qualified Person under National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) and S-K 1300, and has approved the scientific and technical information in this MD&A.

Trilogy’s shares are listed on the TSX and the NYSE American under the symbol “TMQ”.

Additional information related to Trilogy, including our annual report on Form 10-K for the fiscal year ended November 30, 2024, is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

Description of business

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which is doing business as Trilogy Metals US (“Trilogy Metals US”).

Our Upper Kobuk Mineral Projects (“UKMP” or “UKMP Projects”) were contributed into a 50/50 joint venture named Ambler Metals LLC (“Ambler Metals”) between Trilogy and South32 Limited (“South32”) on February 11, 2020 (see below).

The UKMP were contributed into a 50/50 joint venture named Ambler Metals LLC (“Ambler Metals”) between Trilogy and South32 Limited (“South32”) on February 11, 2020 (see below).

The projects contributed to Ambler Metals consist of:

i) the Ambler lands which host the Arctic copper-zinc-lead-gold-silver project (the “Arctic Project”);

and ii) the Bornite lands being explored under a collaborative long-term agreement with NANA Regional Corporation, Inc.

(“NANA”), a regional Alaska Native Corporation, which hosts the Bornite carbonate-hosted copper project (the “Bornite Project”) and related assets.

and ii) the Bornite lands being explored under a collaborative long-term agreement with NANA Regional Corporation, Inc., a regional Alaska

Trilogy Metals Inc.

For the Quarter Ended February 28, 2025

Native Corporation, which hosts the Bornite carbonate-hosted copper project (the “Bornite Project”) and related assets.

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

Corporate and project activities

Bornite Preliminary Economic Assessment

On January 15, 2025, the Company announced the positive results of its Preliminary Economic Assessment Study (“Bornite PEA”) for the Bornite copper project.

Highlights of the Bornite PEA include the following:

● 1.9 billion pounds of copper over 17-year mine life;

● Potential to extend mine activity for the Upper Kobuk Mineral Projects to over 30 years;

● Pre-tax net present value (“NPV”) 8% of $552.0 million and an internal rate of return (“IRR”) of 23.6%;

● After-tax NPV 8% of $394.0 million and after-tax IRR of 20.0%.

The Bornite PEA describes the technical and economic viability of establishing an underground mining operation for a 6,000 tonne-per-day operation with a 17-year mine life.

The Bornite PEA assumes re-purposing the infrastructure described in the Company’s current Feasibility Study for the Arctic Project for the use with the Bornite Project once the Arctic deposit has been depleted.

More information on the Arctic Feasibility Study and the Bornite PEA can be accessed on the Company’s website at www.trilogymetals.com.

Budget -Trilogy

The Company has a 2025 fiscal year cash budget totaling $3.1 million.

For the nine-month period ended August 31, 2024, we used $1.9 million in operating activities mainly for personnel costs, professional fees, regulatory and office expenses compared with budgeted cash expenditures totaling $2.1 million.

Ambler Metals LLC

For the three-month period ended February 28, 2025, we used $0.8 million in operating activities mainly for personnel costs, professional fees, regulatory and office expenses compared with budgeted cash expenditures totaling $1.0 million.

Budget - Ambler Metals LLC

The board of Ambler Metals approved a 2025 fiscal year budget totaling $5.8 million to support external and community affairs, to maintain the State of Alaska mineral claims in good standing, and for the maintenance of physical assets.

During the nine-month period ended August 31, 2024, Ambler Metals expended $3.5 million on salaries and wages, professional fees, engineering, project support costs and mineral property expenses, excluding the Ambler Access Project (the “AAP”) costs, compared with the budget of $4.5 million.

The board of Ambler Metals also approved a 2024 fiscal year budget totaling $2.5 million to support the AAP.

During the nine-month period ended August 31, 2024, Ambler Metals funded $1.4 million to the Alaska Industrial Development and Export Authority (“AIDEA”) in support of the AAP compared with the budget of $1.9 million.

During the third quarter of 2024, we received additional cash from Ambler Metals.

In total, Ambler Metals returned $50 million to Trilogy and South32 as at August 31, 2024.

Ambler Mining District Industrial Access Project (“AMDIAP” or “Ambler Access Project”)

On April 22, 2024, the Company announced that the United States Bureau of Land Management (“BLM”) had filed the Final Supplemental Environmental Impact Statement (“SEIS”) for the AAP on its website.

The Final SEIS identifies “No Action” as the BLM’s preferred alternative.

The proponent for the AAP is AIDEA which is a public corporation of the State of Alaska.

AIDEA’s purpose is to promote, develop, and advance general prosperity and economic welfare of the people of Alaska.

AIDEA strongly objected to both the process used by the BLM to reach a “No Build” decision and the effect of the decision which AIDEA believes illegally blocks access to statehood lands, minerals, and federally patented mining claims.

On May 8, 2024, NANA announced its withdrawal from further involvement with the AAP and stated its intentions to not renew the surface access permit with AIDEA upon the permit’s expiry this year.

On June 28, 2024, the BLM issued the Record of Decision confirming their selection of the No Action alternative and thus denied AIDEA’s application for a right-of-way grant (“ROW Grant”) across BLM-managed lands which terminated the BLM ROW Grant issued to AIDEA on January 5, 2021.

During the three-month period ended February 28, 2025, Ambler Metals expended $1.2 million on salaries and wages, professional fees, engineering, project support costs and mineral property expenses, and the Ambler Access Project costs mainly for subsistence committee meetings and community relations, compared with the budget of $1.0 million.

Trilogy Metals Inc.

For the Quarter Ended August 31, 2024

For the Quarter Ended February 28, 2025

Summary of results

in thousands of US dollars, except per share amounts

in thousands of US dollars, except share and per share amounts

Three months ended

Nine months ended

August 31, 2024

August 31, 2023

August 31, 2024

August 31, 2023

Selected expenses

February 28, 2025

February 29, 2024

General and administrative

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Share of loss on equity investment

Comprehensive loss for the period

Comprehensive loss for the year

Basic and diluted loss per common share

For the three-month period ended August 31, 2024, we reported a net loss of $1.6 million compared to a net loss of $4.1 million for the three-month period ended August 31, 2023.

The decrease in comprehensive loss in the third quarter of 2024 compared to the same quarter in 2023 is primarily due to the decrease in our share of loss of Ambler Metals.

The decrease of our share of losses of Ambler Metals is mainly due to the decrease in corporate wages and in mineral property expenses partially offset from the increase in professional fees.

The primary drivers in decrease in mineral property expenses over the comparative quarter in the prior year were from a reduction in activities both at the project level and at the AAP.

For the nine-month period ended August 31, 2024, we reported a net loss of $7.0 million compared to a net loss of $11.9 million for the nine-month period ended August 31, 2023.

The decrease for the nine-month period ended August 31, 2024, when compared to the same period in 2023, is primarily due to the decrease in our share of losses of Ambler Metals, professional fees and stock-based compensation and salaries.

The decrease of our share of losses of Ambler Metals is mainly due to the decrease in corporate wages due to a reduction in staffing and a reduction in mineral property expenses due to a reduction in project activities which was partially offset by the increase in professional fees related to part-time contractors engaged to assist with management of Ambler Metals, along with consultants engaged in government and external affairs.

For the three-month period ended February 28, 2025, we reported a net loss of $3.6 million comparable to a net loss of $3.6 million for the three-month period ended February 29, 2024.

Comparing the first quarter of 2025 to first quarter of 2024, there was an increase of $0.2 million in professional fees due to increased consulting and legal fees related to the Bornite PEA and the Company’s Base Shelf Prospectus filing, offset by a decrease of $0.2 million in our share of losses of Ambler Metals due to reduction in activities at the Ambler Access Project.

Liquidity and capital resources

We expended $1.9 million on operating activities during the nine-month period ending August 31, 2024 with the majority of cash spent on professional fees and American and Canadian securities commission fees related to our annual regulatory filings, annual fees paid to the Toronto Stock Exchange and the NYSE American Exchange and corporate salaries.

As at August 31, 2024, we had cash and cash equivalents and working capital of $25.7 million.

During the nine months ended August 31, 2024, Trilogy received a total of $25.0 million from Ambler Metals as a return of excess cash to the owners.

Although the Company has a strong cash position, management continues with cash preservation strategies to reduce cash expenditures where feasible, including but not limited to reductions in marketing and investor conferences and office expenses.

In addition, the Company’s board of directors continue to take all of their fees in deferred share units in an effort to preserve cash.

The Company’s senior management team is also continuing to take a portion of their base salaries and all of their short and long term compensation in shares of the Company to preserve cash.

We expended $0.7 million on operating activities during the three-month period ending February 28, 2025 with the majority of cash spent on professional fees to complete the Bornite preliminary economic assessment and related technical reports and American and Canadian securities commission fees related to our annual regulatory filings, annual fees paid to the Toronto Stock Exchange and the NYSE American Exchange and corporate salaries.

As at February 28, 2025, we had $25.2 million in cash and cash equivalents and working capital (current assets less current liabilities) of $24.6 million.

There is sufficient cash on hand to fund the approved fiscal 2025 budget of $3.1 million.

All project related costs are funded by Ambler Metals.

Ambler Metals had $9.8 million in cash and cash equivalents and $8.7 million in working capital as at August 31, 2024.

There are sufficient funds at Ambler Metals to fund this fiscal year’s budget for the UKMP and the AAP.

Trilogy Metals Inc.

For the Quarter Ended August 31, 2024

Ambler Metals had $6.5 million in cash and cash equivalents and $6.4 million in working capital as at February 28, 2025.

There are sufficient funds at Ambler Metals to fund this fiscal year’s approved budget of $5.8 million.

Off-balance sheet arrangements

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Outstanding share data

As at October 8, 2024, we had 160,902,814 common shares issued and outstanding.

As at October 8, 2024, we had 14,316,900 stock options outstanding with a weighted-average exercise price of CDN$1.78, 3,133,412 Deferred Share Units (“DSUs”), and 2,818,339 Restricted Share Units (“RSUs”) outstanding.

As at October 8, 2024 we hold 5,144 NovaGold Resources Inc.

As at April 2, 2025, we had 164,216,410 common shares issued and outstanding.

As at April 2, 2025, we had 14,085,234 stock options outstanding with a weighted-average exercise price of CDN$1.63, 3,443,888 Deferred Share Units (“DSUs”), and 1,798,338 Restricted Share Units (“RSUs”) outstanding.

As at April 2, 2025we hold 5,144 NovaGold Resources Inc.

(“NovaGold”) DSUs for which the NovaGold director is entitled to receive one common share of Trilogy for every six NovaGold shares to be received upon their retirement from the NovaGold board.

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Upon the exercise of all the foregoing convertible securities, the Company would be required to issue an aggregate of 19,328,319 common shares.

Trilogy Metals Inc.

For the Quarter Ended February 28, 2025

New accounting pronouncements

There are no new accounting pronouncements affecting the Company.

Updates to Reportable Segment Disclosures

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”.

AUS 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss and interim disclosures of a reportable segment’s profit or loss and assets.

The standard is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2025, and subsequent interim periods, with early adoption permitted.

The Company is evaluating the impact of the guidance on the consolidated financial statements or disclosures.

Updates to Income Tax Disclosure

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information.

The standard is effective beginning with the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2026, and subsequent interim periods, with early adoption permitted.

The Company is evaluating the impact of the guidance on the consolidated financial statements.

Critical accounting estimates

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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.

We must make estimates and judgments in determining the provision for income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits including interest and penalties.

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Trilogy Metals Inc.

For the Quarter Ended August 31, 2024

For the Quarter Ended February 28, 2025

Stock-based compensation

Compensation expense for options granted to employees, directors and certain service providers is determined based on estimated fair values of the options at the time of grant using the Black-Scholes option pricing model, which takes into account, as of the grant date, the fair market value of the shares, expected volatility, expected life, expected forfeiture rate, expected dividend yield and the risk-free interest rate over the expected life of the option.

Compensation expense for stock options granted to employees, directors and certain service providers is determined based on estimated fair values of the stock options at the time of grant using the Black-Scholes option pricing model, which takes into account, as of the grant date, the fair market value of the shares, expected volatility, expected life, expected forfeiture rate, expected dividend yield and the risk-free interest rate over the expected life of the option.

The use of the Black-Scholes option pricing model requires input estimation of the expected life of the option, volatility, and forfeiture rate which can have a significant impact on the valuation model, and resulting expense recorded.

Additional information

Additional information regarding the Company, including our annual report on Form 10-K for the fiscal year ended November 30, 2023, is available on SEDAR+ at www.sedarplus.com and EDGAR at www.sec.gov and on our website at www.trilogymetals.com.

Additional information regarding the Company, including our annual report on Form 10-K for the fiscal year ended November 30, 2024, is available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov and on our website at www.trilogymetals.com.

Information contained on our website is not incorporated by reference.

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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-Q

Item 2. Management’s Discussion and Analysis