Trilogy Metals

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

Live financials

Cash: $19M
Debt: Nil

Major shareholders:
Electrum Group – 21%
South32 Limited – 11.7%
Paulson & Co. – 10.2%
Neuberger Berman – 9.7%
Baupost Group – 8.7%
Management & Board – ~3%

Trilogy Metals Inc. holds a 50 percent interest in Ambler Metals LLC which owns the Upper Kobuk Mineral Projects (“UKMP”) which are in the Ambler Mining District of northwest Alaska.

The two flagship assets within the UKMP are the Arctic Copper-Zinc-Lead-Gold-Silver project and the Bornite copper-cobalt project. 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 commence permitting at Arctic in 2020. The other flagship asset is our Bornite project, which is located 27 kilometres away from Arctic.

In early 2020, Trilogy formed a 50/50 joint venture with South32 Ltd which is an Australian base metal producer with a market capitalization of approximately US$5.4 billion. To earn their 50% interest in the JV, South32 contributed US$145 million.

We expect that 2020 will be a milestone year for the company given that the United States Bureau of Land Management and the United States Army Corp. of Engineers should complete the permitting of the Ambler Mining District Industrial Access Project which is a 211 mile private road that will link up the Ambler Mining District with the Dalton Highway and the Port of Alaska in Anchorage.

Currently, we have a treasury of approximately US$20 million and a market capitalization of US$200 million and we are listed on the TSX and NYSE.

Management Profile

Jim Gowans – Interim President and CEO

Jim is currently interim President and Chief Executive Officer of Trilogy Metals. He was previously the president, CEO and a director of Arizona Mining Inc. from January 2016 until it was purchased by South32 Limited in August 2018.He was senior advisor to the chair of the board of Barrick Gold Corporation from August to December 2015, co-president from July 2014 to August 2015 and executive vice-president and COO from January to July 2014. He served as managing director of the Debswana Diamond Company in Botswana from 2011 to 2014.He has extensive experience as a senior executive in the mining industry, including holding executive positions at DeBeers SA, DeBeers Canada Inc. and PT Inco in Indonesia, and with Placer Dome Ltd. Mr. Gowans is the past chair of the Mining Association of Canada. Mr. Gowans also has experience in Alaska, having worked for Cominco Limited where he oversaw the completion of a feasibility study and the subsequent design and construction of the Red Dog Mine. Mr. Gowans then operated the Red Dog Mine for three years following its commissioning. He holds a bachelor of applied science degree in mineral engineering from the University of British Columbia and attended the Banff School of Advanced Management. He has extensive mining knowledge and perspective on the importance of corporate social responsibility and brings human resources experience as a former vice-president, human resources at Placer Dome.

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 permitting of the Ambler road (early Q2 2020) and the completion of the Arctic feasibility study (Q2 2020).

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

3 Months:

Completion of permitting of the permitting of the Ambler road by the United States Bureau of Land Management. Completion of the Arctic Feasibility study

6 Months:

Commencement of permitting of the Arctic project and completion of the summer field program at the UKMP

12 Months:

Progress on the Arctic permitting, advancement of the Bornite project and the conversion of all or most of the Arctic Indicated resources into the Measured category.

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

Volatility in copper prices and capital markets – this is also an opportunity for investors

In a sentence, what do you think makes your company such a compelling investment?

The Ambler Metals LLC joint venture holds US$145 million in cash and Trilogy holds approximately US$20 million in cash, so we are well financed for the next few years. Also, the Arctic and Bornite projects are some of the highest grade and quality base metal assets in the world located in a stable jurisdiction.

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.