Trilogy Metals (TMQ) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The unaudited interim financial statements show a slight asset decrease and a higher net loss compared to the prior year Condensed Interim Consolidated Balance Sheets Total assets decreased slightly to $131.0 million, primarily due to the company's share of loss from its Ambler Metals LLC investment Condensed Balance Sheet Data (in thousands of US dollars) | | May 31, 2025 | November 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $24,616 | $25,834 | | Investment in Ambler Metals LLC | $106,152 | $107,497 | | Total Assets | $130,983 | $133,697 | | Liabilities & Equity | | | | Total Liabilities | $967 | $903 | | Total Shareholders' Equity | $130,016 | $132,794 | | Total Liabilities and Shareholders' Equity | $130,983 | $133,697 | Condensed Interim Consolidated Statements of Loss and Comprehensive Loss The net loss increased for both the three and six-month periods, driven by higher professional fees and equity investment losses Statement of Loss Highlights (in thousands of US dollars) | | Three Months Ended May 31 | Six Months Ended May 31 | | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Total expenses | $1,666 | $1,218 | $4,898 | $4,038 | | Share of loss on equity investment | $764 | $602 | $1,345 | $1,395 | | Loss and comprehensive loss | ($2,177) | ($1,759) | ($5,800) | ($5,360) | | Basic and diluted loss per share | ($0.01) | ($0.01) | ($0.04) | ($0.03) | Condensed Interim Consolidated Statements of Cash Flows Cash used in operations was $1.4 million, and the cash balance decreased by $1.2 million to $24.6 million for the six-month period Cash Flow Summary (in thousands of US dollars) | | Six Months Ended May 31, 2025 | Six Months Ended May 31, 2024 | | :--- | :--- | :--- | | Cash flows used in operating activities | ($1,425) | ($1,069) | | Cash flows from financing activities | $202 | $— | | Cash flows from investing activities | $— | $12,500 | | Change in cash | ($1,223) | $11,431 | | Cash – end of the period | $24,616 | $14,022 | Notes to the Condensed Interim Consolidated Financial Statements Notes detail the company's 50/50 joint venture, share capital activities, a new Base Shelf Prospectus, and stock-based compensation - The company's primary business is mineral exploration through its 50% equity investment in Ambler Metals LLC, which holds the UKMP in Alaska[15][26] - The investment in Ambler Metals is accounted for using the equity method, with a carrying value of $106.2 million as of May 31, 2025[27][29][30] - The company established a Base Shelf Prospectus to issue up to US$50 million in securities and an At-The-Market (ATM) program to sell up to US$25 million of common shares[38][39] Stock Option Activity (Six months ended May 31, 2025) | | Number of options | Weighted average exercise price (CDN$) | | :--- | :--- | :--- | | Balance – beginning of the year | 13,630,234 | $1.77 | | Granted | 2,125,000 | $1.52 | | Exercised | (350,000) | $0.82 | | Expired | (3,390,000) | $2.75 | | Balance – end of the period | 12,015,234 | $1.48 | Management's Discussion and Analysis (MD&A) Management discusses increased net losses due to financing-related costs, while maintaining a sufficient cash position for the next year Corporate and Project Activities Key activities include filing a US$50 million Base Shelf Prospectus and announcing positive results from the Bornite PEA - A Base Shelf Prospectus was made effective on April 14, 2025, allowing for the issuance of up to US$50 million in securities[72] - An At-The-Market (ATM) equity program was established to sell up to US$25 million in common shares for UKMP development and corporate purposes[73][74] - The Bornite PEA shows a 17-year mine life with an after-tax NPV8% of $394.0 million and an IRR of 20.0%[75][79] - The Ambler Metals JV approved a $5.8 million budget for 2025 activities, plus a supplemental $0.6 million for the Ambler Access Project[77][78] Summary of Results Net loss increased in Q2 and the first six months, primarily due to higher professional and regulatory fees for new financing programs Comparison of Selected Expenses (in thousands of US dollars) | | Three months ended May 31 | Six months ended May 31 | | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Professional fees | $612 | $192 | $1,059 | $392 | | Share of loss on equity investment | $764 | $602 | $1,345 | $1,395 | | Comprehensive loss | ($2,177) | ($1,759) | ($5,800) | ($5,360) | - The increase in comprehensive loss was mainly driven by higher regulatory and legal fees for the Company's Base Shelf Prospectus and ATM Program[82][83] Liquidity and Capital Resources The company holds $24.6 million in cash, sufficient for the next 12 months, with access to further capital via established financing programs - The company has $24.6 million in cash and cash equivalents and working capital of $23.8 million as of May 31, 2025[85] - Management believes the current cash position is sufficient for the next 12 months, supported by the US$50 million Base Shelf Prospectus and US$25 million ATM Program[86][87] - During the six-month period, the company used $1.4 million in operating activities, primarily for corporate salaries and professional fees[84] Quantitative and Qualitative Disclosures about Market Risk This section is not applicable to the company for this reporting period - The company has stated that quantitative and qualitative disclosures about market risk are not applicable[97] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of May 31, 2025[98] - No material changes in internal controls over financial reporting occurred during the quarter[100] PART II - OTHER INFORMATION Legal Proceedings The company is not aware of any material current, pending, or threatened litigation - The company reports that it is not a party to any material litigation and is not aware of any pending or threatened litigation[102] Risk Factors A new risk factor concerning U.S. international trade policies has been added since the last annual report - A new risk factor has been added regarding potential changes in U.S. laws and policies on international trade, which could adversely impact the company[104][105] Other Information The report confirms no unregistered sales of equity securities or new director and officer trading arrangements - There were no unregistered sales of equity securities or use of proceeds during the period[106] - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the quarter[108]