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Item 2. Management’s Discussion and Analysis

2025-07-10 compared with 2025-04-02 · 94 added, 41 removed, 148 unchanged (48% of the section changed)

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Management’s Discussion & Analysis

For the Quarter Ended February 28, 2025

For the Quarter Ended May 31, 2025

(expressed in US dollars)

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

the aggregate value of common shares that may be issued pursuant to the at-the-market equity offering program and the anticipated use of net proceeds;

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.

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● 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

For the Quarter Ended May 31, 2025

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

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

● there being no significant disruptions affecting operations, whether relating to labor, supply, power damage to equipment or other matter;

● there being no significant disruptions affecting operations, whether relating to labor, supply, power damage to equipment or other matters;

● expected trends and specific assumptions regarding metal prices and currency exchange rates;

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Trilogy Metals Inc.

For the Quarter Ended February 28, 2025

For the Quarter Ended May 31, 2025

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

● uncertainty related to inferred mineral resources;

● uncertainty related to inferred, indicated and measured mineral resources;

● mining and development risks, including risks related to infrastructure, accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in development, construction or production;

● uncertainty related to successfully acquiring commercially mineable mineral rights;

● risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of our mineral deposits;

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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;

● risks related to the acquisition and integration of operations or projects;

● risks related to industry competition in the acquisition of exploration properties and the recruitment and retention of qualified personnel;

● our need to attract and retain qualified management and technical personnel;

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● risks related to adverse publicity from non-governmental organizations;

● 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;

Trilogy Metals Inc.

For the Quarter Ended February 28, 2025

For the Quarter Ended May 31, 2025

● changes in U.S.

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

● 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 (“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;

● the need for future financing;

● risks related to the sales by existing shareholders;

● risks related to the possible utilization of the ATM Program;

● loss of the entire investment;

● risks related to the Company’s use of proceeds from the sale of its securities;

● risks associated with negative operating cash flow;

● the uncertainty of maintaining a liquid trading market for the common shares;

● the absence of a public market for certain of the securities.

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 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.

(“Trilogy”, “Trilogy Metals”, “the Company” or “we”) is dated July 10, 2025 and provides an analysis of our unaudited condensed interim consolidated financial results for the quarter ended May 31, 2025 compared to the quarter ended May 31, 2024.

The following information should be read in conjunction with our May 31, 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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GAAP accounting policies is outlined in note 2 of the audited consolidated financial statements.

All amounts are in United States dollars unless otherwise stated.

All amounts are in United

Trilogy Metals Inc.

For the Quarter Ended May 31, 2025

States dollars unless otherwise stated.

References to “Canadian dollars” and “CDN$” are to the currency of Canada and references to “U.S.

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We are a base metals exploration company focused on the exploration and development of mineral properties, through our equity investee, in the Ambler mining district located in Alaska, U.S.A.

We conduct our operations through a wholly owned subsidiary, NovaCopper US Inc.

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

We conduct our operations through a wholly owned subsidiary, NovaCopper US Inc., which is doing business as Trilogy Metals US (“Trilogy Metals US”).

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).

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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., 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.

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

Annual General Meeting

The Annual General Meeting of shareholders was held on May 13, 2025.

All directors nominated by the Company were elected by shareholders of the Company, with each director receiving greater than 94% of the votes cast.

The shareholders also voted in favour of all other items of business including the continuation of the Company’s Restricted Share Unit Plan and Deferred Share Unit Plan.

Base Shelf Prospectus

The Company filed a final short form base shelf prospectus base shelf prospectus with the securities commissions in each of the provinces and territories of Canada (the “Canadian Base Shelf Prospectus”), and a corresponding shelf registration statement on Form S-3 (the “Registration Statement” together with the Canadian Base Shelf Prospectus, the “Base Shelf Prospectus”) with the United States Securities and Exchange Commission (“SEC”) allowing for the future issuance, from time to time, of up to US$50 million in common shares of the Company (the “Common Shares”), warrants to purchase Common Shares, share purchase contracts of the Company, subscription receipts and units comprised of some or all of the foregoing securities (collectively, the “Securities”).

Any amounts, prices and terms will be determined based on market conditions at the time of an offering and will be set out in an accompanying prospectus supplement.

The final Base Shelf Prospectus became effective on April 14, 2025.

The Canadian Base Shelf Prospectus will remain effective for 25 months, while the Registration Statement will remain effective for three years.

At-The-Market Offering

On May 27, 2025, the Company entered into an equity distribution agreement (the “Distribution Agreement”) with BMO Nesbitt Burns Inc., Cantor Fitzgerald Canada Corporation (the “Canadian Agents”), BMO Capital Markets Corp.

and Cantor Fitzgerald & Co.

Agents” together with the Canadian Agents, the “Agents”) for an at-the-market equity program (“ATM Program”).

On the same date, the Company filed a prospectus supplement (the “Prospectus Supplement”) to the Canadian Base Shelf Prospectus and the US shelf registration statement on Form S-3 qualifying the distribution of the

Trilogy Metals Inc.

For the Quarter Ended May 31, 2025

Common Shares under the ATM Program.

Under the ATM Program and pursuant to the Distribution Agreement and the Prospectus Supplement, the Company may sell up to US$25 million of Common Shares.

The Common Shares sold under the ATM Program, if any, will be sold at the prevailing market price at the time of sale.

The net proceeds of any such sales under the ATM Program are anticipated to be used for continued development of the UKMP and for general corporate purposes.

Bornite Preliminary Economic Assessment

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

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.

For the three-month period ended May 31, 2025, we spent $1.2 million compared to budgeted cash expenditures of $1.0 million.

We incurred unplanned expenditures during the second quarter of $0.7 million for the Base Shelf Prospectus and ATM program, offset by the timing of our annual insurance payment of $0.5 million which we fully paid after the quarter ended, in June 2025.

For the six-month period ended May 31, 2025, we spent $2.0 million primarily for personnel costs, professional fees, regulatory and office expenses comparable with budgeted cash expenditures totaling $2.0 million.

Our overall corporate expenditures are tracking as planned except for the costs associated with the establishment of the Base Shelf Prospectus and ATM program.

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 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.

For the six-month period ended May 31, 2025, Ambler Metals spent $1.9 million in expenses primarily related to salaries and wages, professional fees, engineering, and project support.

This compared to a budget amount of $2.2 million, resulting in expenditures being under budget by $0.3 million.

The variance was mainly due to delayed hiring and lower than expected general administrative expenses.

In addition, the board of Ambler Metals approved a supplemental budget of $0.6 million to support the Ambler Access Project for the same six-month period ended May 31, 2025.

For the six-month ended May 31, 2025, Ambler Metals incurred $0.4 million related to the Ambler Access Project costs, primarily consisting of subsistence committee meetings and community relations activities.

Trilogy Metals Inc.

For the Quarter Ended February 28, 2025

For the Quarter Ended May 31, 2025

Summary of results

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Three months ended

February 28, 2025

February 29, 2024

Six months ended

General and administrative

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Basic and diluted loss per common share

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.

For the three-month period ended May 31, 2025, we reported a net loss of $2.2 million compared to a net loss of $1.8 million for the three-month period ended May 31, 2024.

The increase in comprehensive loss in the second quarter of 2025, compared to the same quarter in 2024, was primarily driven by higher regulatory expenses and legal fees related to the Company’s Base Shelf Prospectus and ATM Program.

For the three-month period ended May 31, 2025, salaries increased due to executives receiving 100% of their base compensation in cash starting on March 1, 2025.

In comparison, during the same period in 2024, all of the base salary for the Company’s Chief Executive Officer and one-third of the base salaries for the other executives was paid in Restricted Share Units (“RSUs”) as part of a multi-year cash conservation initiative, which was recorded in stock-based compensation.

The increase in salaries was offset by a corresponding decrease in salaries and directors expense - stock-based compensation.

The increase in our share of loss of Ambler Metals was primarily driven by higher professional consulting fees related to engineering activities incurred during the second quarter and partially offset by a reduction in overall activities at the Ambler Access Project.

For the six-month period ended May 31, 2025, we reported a net loss of $5.8 million, compared to a net loss of $5.4 million for the same period in 2024.

The increase was primarily driven by higher regulatory expenses and legal fees related to the Company’s Base Shelf Prospectus and ATM Program of $0.7 million, as well as fees related to the preparation of the Bornite preliminary economic assessment study (the “Bornite PEA”) of $0.2 million.

Salaries increased due to executives receiving 100% of their base compensation in cash starting on March 1, 2025.

In comparison, during the same period in 2024, a portion of executive compensation was paid in RSUs.

Our share of losses from Ambler Metals for the six-month period ended May 31, 2025 remained comparable to the same period in 2024.

Additionally, overall corporate costs were partially offset by $0.4 million in interest income earned.

Liquidity and capital resources

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 $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.

During the six-month period ending May 31, 2025, we used $1.4 million in operating activities.

The majority of these funds was spent on corporate salaries, professional fees to complete the Bornite PEA, and the establishment of the Shelf Base Prospectus and ATM Program along with related regulatory filing fees with the United States and Canadian securities commissions.

In addition, the Company incurred annual listing fees for the NYSE American Exchange and the Toronto Stock Exchange during the first fiscal quarter.

These outflows were partially offset by $0.4 million in interest income earned .

As at May 31, 2025, we had $24.6 million in cash and cash equivalents and working capital, which we define as current assets less current liabilities, of $23.8 million.

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

Trilogy Metals Inc.

For the Quarter Ended May 31, 2025

To ensure sufficient liquidity in the future to support our operations, administration expenses and contributions for our share of Ambler Metals, we have an effective Base Shelf Prospectus that allows for the future issuance, from time to time, up to US$50.0 million in Securities.

We have also established an ATM Program whereby we may, from time to time and at our discretion, offer and sell the Common Shares having an aggregate gross sales price of up to US$25.0 million under the ATM Program, through the Agents, at the prevailing market price at the time of sale.

As at July 10, 2025, we have not utilized the ATM program.

We believe our current cash position is sufficient to meet our working capital requirement for the next 12 months.

Additionally, we have access to capital markets to support any future funding needs related to joint venture contributions.

Off-balance sheet arrangements

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Outstanding share data

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.

As at July 10, 2025, we had 164,241,410 common shares issued and outstanding.

As at July 10, 2025, we had 12,015,234 stock options outstanding with a weighted-average exercise price of CDN$1.48, 3,206,355 DSUs, 304,605 Fixed DSUs and 1,798,338 RSUs outstanding.

As at July 10, 2025 we 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 17,325,391 common shares.

Trilogy Metals Inc.

For the Quarter Ended February 28, 2025

New accounting pronouncements

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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.

ASU 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.

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The most critical accounting estimates upon which our financial status depends are those requiring estimates of the recoverability of our equity method investment in Ambler Metals, income taxes and valuation of stock‐based compensation.

Trilogy Metals Inc.

For the Quarter Ended May 31, 2025

Impairment of Investment in Ambler Metals LLC

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We are subject to income tax law in the United States and Canada.

The evaluation of tax liabilities involving uncertainties in the application of complex tax regulation is based on factors such as changes in facts or circumstances, changes in tax law, new audit activity, and effectively settled issues.

The evaluation of tax liabilities involving uncertainties in the application of complex tax regulation and is based on factors such as changes in facts or circumstances, changes in tax law, new audit activity, and effectively settled issues.

The evaluation of an uncertain tax position requires significant judgment, and a change in such recognition would result in an additional charge to the income tax expense and liability.

Trilogy Metals Inc.

For the Quarter Ended February 28, 2025

Stock-based compensation

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Not applicable.

Trilogy Metals Inc.

For the Quarter Ended May 31, 2025

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