Earnings Call - TRILOGY METALS INC

Permitting copper mining in Alaska. Hello and welcome back to KITCO Mining with me Paul Harris here at the 2026 Precious Metal Summit in Beaver Creek in Colorado. Joining me now is Tony Giardini, CEO of Trilogy Metals which trades on the NYSE American and the TSX under the tickers TMQ. Tony, welcome back to Kitco. Thanks for having us back. We had a great interview at PDAC and looking forward to giving you an update as to how things are moving forward. Well, thank you very much. And there's a lot to update on because you had some major news out recently. But before we get to that, just as a reminder to our viewers, you're the 50% owner, together with South32, which owns 50% of Ambler Metals, which controls the Upper Coburg mineral projects in the Arctic and Borneite deposits in Alaska. The big news recently, the U.S. Department of War executed definitive agreements earlier this month, in fact, for a $35.6 million U.s. dollar strategic equity investment. Congratulations, Tony. How much of that investment goes direct to Trilogy? How does that break down? Right. So the deal goes back to October of 2025. And basically it was $35 million of funding. And of that 35, all of it goes into the JV. So 17 and a half came from a Trilogy side, 17 and a half from a South 32 side. And it took a little longer than we were hoping. When we signed the agreement in October of 2025, we prepared the documentation on the basis that it was going to be a March 31st closing in 2026, but unfortunately it got dragged on a little longer than that. And we finally signed the agreements just over a month ago. And then the funding just recently occurred. So it's good that that is done and they're on the shareholder register now. They're actually at 9.1% because there were some shares issued over the last year or so. So there's been some dilution to their position, but nonetheless, they're there. And we're looking forward to working with them in terms of advancing the development of the Yambla Mining District. Okay. Did that, let's say, approximate six months delay, did that actually delay any work programs or anything of that nature? No, I think what we were thinking about earlier in the year was if it had occurred earlier, that funding would have gone directly into the JV and it would have funded the current year and we wouldn't have funded additional amounts. So what basically happened was Trilogy and South32 funded the Current Year Program and the money that's now being received has gone into the JB directly so the JB is already cashed up for the next year. Okay. You mentioned the government, U.S. government now has a 9.1% equity interest. How did that element, how did that component come about, the government having an equity stake? Yeah, so what happened is, I believe the U.K. government has been looking at this project for a long period of time. And really, their interest stems from the critical metal component that exists in the Amblin Mining District, whether it's copper, zinc, silver, there's also cobalt, germanium in the district. And so there's always been a lot of interest. And we had looked at some potential funding associated with the Boronite Project when we were in discussions with the government in 2025. And as the president was getting ready to basically pass a presidential decree associated with The Road, we also entered into discussions with The Department of War about potential funding. And we initially talked about those applications that we had put forward. And their interest was actually having a 5% direct interest in the JV. The challenge with that is that the JV is owned by Trilogy and South32, but it also has Nana as a partner in that JV. So to expedite the process, we looked at it a little differently and we ended up doing the issuance of shares from Trilogi 5% and South 32 sold a 5% stake that they held in Trilogie. So giving the U.S. government 10% diluted down to 9.1, which is an indirect 5% stake or 4.6, I guess, approximately. We're going to tie ourselves in knots working that out. But on a serious note, U.N. government involvement, particularly from the Department of War, I can understand how that opens up some doors. Is there a possibility that that could somehow impinge on your strategic flexibility going forward? Because perhaps not all partners want to work or be associated directly with the U.S. government and certainly not the Department of War. Well, you know, the agreement has the ability for the Department War to provide an independent board member to Troji. There's also a board observer right at Troji level. And I think those are the belts and suspenders that you would expect from this type of investment. I think for us, it's really about not so much a quantum that we've received, but the validation that we have from the U.S. government in terms of making the investment and participating. And I do agree with you. I think it opens up a lot of doors with us to work with the U。S. government because we are very clearly aligned in what we want. We want to see this project move forward and the district get developed. And I want to talk a little bit more, obviously, about the district as we go forward. Do I think it impinges us in any way? I don't think so, because at the end of the day, Trilogy is focused solely in Alaska and right in that district, in the Upper Cobalt Mineral District. So I think It ties quite nicely in what we're trying to do. And the story is a critical metal story. It's about what I said in our previous interview, which is domestic production for domestic purposes. So I Think It works quite well. So I don't expect that there'll be an impact, a negative impact in terms of the involvement of Department of War in the investment in Georgia. OK, thank you. Now, before the deposits can actually be developed, you need to build a road. The Trump administration approved the Ambler Road permit last year, 2025. You've got to build 211 mile road called the Amblar Road. What's the realistic timeline and funding structure for that that you're working to? Yeah, so you're absolutely correct. President Trump, through the presidential decree, reinstated the permits and those were issued shortly after. And then the other major development with respect to the road was that Secretary Bergman, Department of Interior, repealed PLO 5150, which was basically land that was at the beginning of the Ambler Access Road that was federal land. It's now being conveyed back to the state. So now we have a scenario where the federal government doesn't have any involvement with the road in terms of the permitting of the road. There's a 404 at wetlands permit that needs to be required as part of the permit process, but that's it. And the U.S. Army Corps of Engineers will likely be the lead agency in terms OF the U-S. government. In terms of timeline, what ADA has been working on is they've been doing geotech work that's progressed very, very well. They've been looking at funding sources associated with the road, and they're updating the estimate for the capital. As far as a realistic timeline, what we're looking at is probably funding slash building decision being made sometime in 2028. And the reason why I say 2028 is because that's the same time that we expect to have the mine permitting done and be in a position to make an investment decision, hopefully, with respect to the mine. And so the road is required, obviously, to advance a mine, but we don't need it before the mine is built. In other words, what will likely happen is that we'll build what's called a pioneer road, which would be an ice road, to bring supplies and materials into the district. And then the road itself will be built at the same time that the mine has been built. So I would say we would likely see a timeline of somewhere around 2028, although I expect there'll be lots of developments in 2027. relating to the funding of a road and the next steps in advancing the project. Okay. So what I'm taking away from that is obviously building 211 miles of road, that's going to be quite an investment. There's no point making that investment or that full investment until you've got the permits in hand to build the mine. And the road was always expected to be funded and developed by the state of Alaska through its development agency, ADA. That's the same model that was used for the Red Dog Road when it was constructed And so they constructed an 80-mile road plus a port plus a storage facility in the 1980s. And so our model is very similar. And the idea on the recovery of that cost associated with the road is that it would come through tolls. And, you know, I mentioned earlier when we talk about the Ambler Mining District, we do see it as a district. We don't see it als the Arctic Mine or the Boronite Mine. We see an Ambler mining district extending for a long period of time. So we don't expect to be the only users of a road. We expect other parties will be using that road, but it will be a private industrial use road only. Okay, so the state of Alaska and or IAIDA, they're going to finance the road, South 32 and Trilogy. Will you be financing that or you'll pay for it afterwards once it's built? We'll pay it through tolls. The expectation is that we'll pay through toll and I expect what will happen, Paul, is that incremental payments will be made based on where commodity prices are. I suspect there could be higher payments that will be made if commodity prices are higher, and I expect that there could be payments that could be deferred possibly if commodity prices enter into lower price ranges. But I think those are all aspects that need to be negotiated. We haven't at this point contemplated a direct investment in the road, although the Ambler JV had committed $70 million in terms of advancing the road. $70 billion was committed between ourselves and ADA, so jointly 70 million, so 35 each. And we funded a portion of that 35. I think there's probably a remaining portion that's still to fund, which we will fund in terms of advancing the road. And the thought process for funding that was that we would get credits against tolls in the future. But it could end up that we will contribute more. I think that's all going to be part and parcel of how we look at the funding scenarios with respect to the road." Okay, but you could be in a situation where your finance just focuses on building the mine rather than... That's what my expectation would be, that our financing will be associated with building the Mine. And that financing may happen at the JV level, although the parties would need to agree. Or it could happen individually where South 32 will fund their share, we'll fund our share. Okay, let's talk about the permitting. The Arctic project has FAST 41 status. What is the timeline that that confers on the project? Right, so we just announced on Friday, this past Friday, that the notice of intent has gone out. So we now have a very specific timeline associated with permitting. And the expectation is that the permits would all be received and the final EIS would be filed and in place by September of 2028. Draft EIS in October of next year and then final comment period after that. So we're well on our way in terms of permitting We've got a permitting team at Ambler Metals, and we're obviously leveraging the support of Cell 32 that went through the FAST-41 permitting process for its Hermosa project in Arizona. And we're using an individual called Ron Rimmelman at the JV level. He's actually the president. He started out doing the permitting proces. But Ron has great experience in the great state of Alaska because he was involved with permitting the Donlon Creek mine as part of Nova Gold. So the good thing about the permitting process and the FAST-41 is that it's integrating the federal permits and the state permits. So this is the first time this has happened in Alaska. But we've got the template now. We're in FAST 41. You can go online. You can look at the progress. You can Look and See what the deadlines are. And we all have an expectation that we'll adhere to those deadlines, including the federal government in terms of the overview process that they provide. And one other part of the concept is that there's essentially, let's say, a project manager who brings everybody together to ensure everything's moving as it should be. And that is a big part of a process. And the good thing is that we're not the first project in Fast41, so there's already experience. And we've seen other companies come through the whole process. And our expectation is that the timeline that's been defined will be adhered to. And when do you anticipate a recorded decision? September of 2028. Okay. I recall that there was some sort of litigation or something like that from a small tribe or small band in Alaska to do with the road. What's the status of that? Does that still exist? Yeah. So what happened was there was litigation that had been initially set aside when the Biden administration brought out the no action decision in April of 2024. With the presidential decree and the restating of the licenses or permits with respect to the road, it's not clear whether that litigation could actually still go forward. And particularly given that Secretary Burgum has now transferred those federal lands from a federal government to the state, it's really not clear if there's any basis for any litigation going forward. That being said, Paul, look, there's going to be litigation here. It's just going to happen, and we don't know how it's goingto progress. we're looking at it from all of the different perspectives. The view that legally we had and were given was that the presidential decree wasn't subject to litigation. That may not be the case in the sense that someone may try to argue that they can be litigated. That being said, we feel like we're in a very strong position to defend it. And when I say we, I mean that the Department of Justice would be the party that would be defending it. Because yeah, in those situations, it's usually the litigant suing the state or suing the federal government. And the federal government is very committed to advancing this project and I expect that they will put all of their resources available in terms of litigating these projects. So I think we feel pretty comfortable and we're looking at all of the potential avenues that are there but litigation is all part and parcel of this and I would say it doesn't necessarily reflect that there isn't support for the project within the communities, particularly communities where we're going to operate. What ends up happening is that tribal organizations are encouraged to participate as part of a litigation. They're not funding it. It's usually funded by NGOs and organizations that are interested in these projects not advancing. And so we'll have to let the process play itself out in Alaska through the court system. Okay. Well, let's talk about something a bit more agreeable um you mentioned earlier about um arctic's just one deposit within the broader ambler mining district you've also got the bornite deposit so let's talk a little bit about you know what work programs um have you got underway or are you planning to get underway to further explore the ambler dining district yeah that's a great question and we we just finished the field season uh right now in fact we're going to be demobbing shortly and we had 80 90 people on site, I would say we're very successful in terms of getting the work done. A lot of the drilling was related to geotech and hydrology, really to support the definitive feasibility study that's going to be moving forward. We should be announcing probably sometime in the next couple of weeks that we've hired a VP project director at the Amblin Metals level to deliver the definitive feasibility story. That person has very strong Alaska experience and has worked on Arctic projects and built arctic projects in the past. So I think that's a big step for us. And what we would be looking at from that perspective is to be in a position where we'd have that study work done by 2028 and put us in a situation to hopefully make an investment decision at that time. At the same time that we would have permits in hand from the perspective of the mine permitting process. As far as the exploration, as I said, most of it this year was focused on hydrology and geotech. We did drill a couple of exploration-type holes, and what we're going to be doing now is sitting down, looking at those results, and more importantly, really looking at where we want to go from an exploration perspective in 2027. And we think there's lots of options that we can look at. We're considering possibly doing more exploration at the Borneate area, which we haven't done for a while, but we have a number of targets in and around the Arctic VMS area that we want to explore. So lots of opportunities in the district. Incidentally, Tony, with the Ambler Access Road, it's going to basically go from east to west, 211 miles to the Arctic Project. Will that continue on towards the Boronite Project or will that be a later development? No, what will happen is that it will go directly to the Antarctic Project and then what we'll likely look at is a spur road at some point in the future with respect to Boronate. And it's not necessary to link it. And boronite isn't part of the permitting process that we're going through with respect to the mine. We're looking at boronate right now from an exploration perspective. There may be an opportunity in the future to process boronete material through the Arctic mine, but that would require a separate permitting proces to occur. And that's something that we'll explore in the futur. But, you know, what we like about where we're at is really about prospectivity and particularly with these VMS deposits, they occur in clusters. And even though we already have, as someone described today or the other day when we were talking, it's a unicorn in terms of these VBS deposits, 50 million tons. We know that there's a lot more opportunities in the district. OK, Tony, you've just hit a couple of important catalysts. What are other catalysts that our viewers should watch out for over the next 12 to 18 months from Trilogy? I think, you know, I've laid some of them out in terms of obviously the permitting process as it unfolds and people can follow that on the dashboard and we'll be providing updates as to where that goes. Once we bring on our project director with respect to the project and we start down the feasibility, definitive feasibility study route, we'll have more information there. The results from the drill season will be coming out at some point later this year. And then we'll be looking at the budget for 2027. I expect there'll be updates with respect to the road and in terms of how we look at that. And then the greater exploration strategy in the district itself. So I think that's sort of the starting point. We've had a great 2026, notwithstanding that we've had to wait a while to get the DOW funding closed, but we've increased our own bench strength at the trilogy level we've added. a number of people at the JV level and I expect we'll continue to be adding people at the Jv level as we start to ramp up the project. Excellent well congratulations once again on the DOW funding. Tony Giardini thank you very much for joining me today. Thank you Paul and always great to be here. Excellent thank you and once again Trilogy Metals trades on the NYSE American and the TSX under the tickers TMQ. We have a lot more to come from the 2026 Precious Metals Summit summit here in Beaver Creek, Colorado, so stay tuned and hit that subscribe button. I'm Paul Harris and this is KIKO Mining. Thanks for watching!