Trilogy Metals

Primary ticker: TSX:TMQ; NYSE:TMQ
Stage of development: Exploration, Development
Commodity: Cobalt, Copper, Gold, Lead, Silver, Zinc
Project to promote: Upper Kobuk Mineral Projects
Project location: USA

Live financials

Cash: USD$19.2M

Major shareholders:
Electrum Group – 21%
South32 Limited – 11.7%
Paulson & Co. – 10.2%
Selz Capital – 9.7%
Management ownership – 3%

Trilogy Metals Inc. is a metals exploration and development company which holds a 50 percent interest in the UKMP in northwestern Alaska. The UKMP is located within the Ambler Mining District which is one of the richest and most-prospective known copper-dominant districts located in one of the safest geopolitical jurisdictions in the world. It hosts world-class polymetallic VMS deposits that contain copper, zinc, lead, gold and silver, and carbonate replacement deposits which have been found to host high-grade copper and cobalt mineralization. Exploration efforts have been focused on two deposits in the Ambler mining district – the Arctic VMS deposit and the Bornite carbonate replacement deposit. Our vision is to develop the Ambler mining district into a premier North American copper producer.

Management Profile

Pat Donnelly, Vice President

Pat Donnelly is Vice President, Corporate Communications & Development for Trilogy Metals and has a broad range of experience in mineral exploration, capital markets, corporate development and investor relations. He began his career as a project geologist 25 years ago exploring for precious and base metals and diamonds in western and northern Canada. Subsequently, Pat worked for a Canadian securities firm as a base metals mining analyst. Between 2012 and 2014 Mr. Donnelly was the Vice-President of Corporate Communications for Trilogy Metals. Most recently he was the President of First Mining Gold Corp. where he played a key role. Pat holds a B.Sc. in Geology (Honors) from the University of British Columbia and has an MBA from the University of Toronto.

What is your rationale for attending 121 Mining Investment?

We are looking to diversify our shareholder base.

What recent news would you like to highlight to investors attending?

– Completion of the permitting of the Ambler road
– Completion of the Arctic feasibility study
– The appointment of the Company’s new President and CEO
– The joint venture between Trilogy and South32 on the Upper Kobuk Mineral Projects

What are your key goals for the next 3, 6 and 12 months?

3 Months:

-Completion of the permitting for the Ambler road
-Completion of the Arctic feasibility study
-Hiring of the Company’s new President & CEO

6 Months:

-Summer exploration program
-Commencement of permitting of the Arctic project
-Next steps in the development of the Ambler road
-Advancement of joint venture with South32

12 Months:

-Permitting of the Arctic project
-Commencement of construction of the Ambler road
-Advancement of joint venture with South32

What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these?

Extreme volatility in copper prices and the global capital markets – we are well funded with US$145 million in the joint venture with South32. Trilogy also has an additional US$20 million in cash.

What do you think makes your company such a compelling investment?

We own some of the highest grade copper projects in the world and are well cashed up for years. Our assets are located in a tier one mining jurisdiction. We will not be needing any cash for a number of years.

Analyst Insight – provided by Independent Investment Research

Trilogy Metals is a TSX-listed and NYSE-listed resource company focused on exploring and developing its sizable 143,000 hectare holdings in the Ambler Mining District within Alaska, comprising two deposits – the Arctic VMS deposit and the Bornite carbonate replacement deposit. Trilogy holds a 50% stake in both projects.

Arctic is one of the highest-grade copper deposits known in the world with an average grade of 6% copper-equivalent. At a base-case 0.5% copper-equivalent cut-off grade, the Arctic deposit is estimated to contain in-pit Indicated Resources of 36.0 million tonnes at 3.07% copper, 4.23% zinc, 0.73% lead, 0.63 g/t gold and 47.6 g/t silver – for 2.4 billion pounds of contained copper and 3.4 billion pounds of contained zinc.

Trilogy has completed a Pre-Feasibility Study (PFS) for the Arctic Project, with positive results. It estimates Pre-tax Net NPV8% of $1,935 million calculated at the beginning of the three-year construction period and an IRR of 38% for the base case, along with an After-tax NPV8 of $1,412.7 million and after-tax IRR of 33.4% for the base case. Initial capex is estimated at $779.6 million, with estimated pre-tax and after-tax payback of initial capital within 2 years. At $2.00/lb copper, after-tax payback is 3 years.

The minimum 12-year mine life supports a maximum 10,000 tonne-per-day conventional grinding mill-and-flotation circuit to produce copper, zinc and lead concentrates containing significant gold and silver by-products. The life of mine strip ratio is 6.9 to 1 and cash costs are estimated at a low $0.15/lb of payable copper.

In early 2020, Trilogy formed a 50/50 joint venture with South32 Ltd, which is an Australian base metal producer valued at around US$5.4 billion. To earn their 50% interest in the JV, South32 contributed US$145 million. The company is moving forward with a feasibility study on Arctic, which we expect will be completed in the first half of 2020. We also expect to permitting to commence at Arctic in 2020.

Trilogy’s other flagship asset is its Bornite project, which is located 27km away from Arctic. The Bornite project contains approximately 5.5 billion pounds (2.5 million tonnes) of copper and 77 million pounds of cobalt.