Sale of Sunward Investments Ltd

12 Months Ended

Nov. 30, 2016

Disposition of Sunward Investments Ltd. [Text Block]

3 Sale of Sunward Investments Ltd

On September 1, 2016, Trilogy completed the sale of Sunward Investments to Brazil Resources Inc. (“BRI”), a public company listed on the TSX-Venture exchange, of all of the issued and outstanding shares of Sunward Investments for consideration of 5,000,000 common shares of BRI valued at $7.8 million and 1,000,000 warrants, with each warrant exercisable into one common share of BRI for a period of two years at an exercise price of Cdn$3.50, valued at $0.3 million for total consideration of $8.1 million. On December 7, 2016, BRI changed its name to GoldMining Inc. Of the common shares received, 2,500,000 common shares were saleable immediately with the remaining 2,500,000 common shares saleable six months following the close. Sunward Investments, through a subsidiary, owns 100% of the Titiribi gold-copper exploration project located approximately 70 kilometers southwest of the city of Medellin, in Antioquia Department, Colombia. Trilogy acquired Sunward Investments and the Titiribi project as part of its acquisition of Sunward in a business combination which closed on June 19, 2015 (Note 4).

The Company recognized a gain on the sale of Sunward Investments of $4.4 million as of September 1, 2016 as outlined below.

	in thousands of dollars
	$
Consideration received		8,102
Cash reimbursement from BRI		51
Net assets sold		(3,545)
Transaction costs		(160)
Gain on sale of Sunward Investments		4,448

The fair value of the common shares received was determined based on the closing price of BRI of $1.56 (CDN$2.04) at the date of completion. The fair value of the BRI warrants was determined using the Black-Scholes option pricing model. Assumptions used in the pricing model in the measurement of the fair value of the warrants are as follows:

Risk-free interest rates	0.59	%
Exercise price	CDN$3.50
Expected life	2 years
Expected forfeiture rate	0	%
Expected volatility	66.9	%
Expected dividends	Nil

The common shares and warrants received have been designated as held-for-trading financial assets.

Following the announcement, the Company classified the operations of Sunward Investments as discontinued operations, retrospectively. The following expenses comprise the discontinued operations of Sunward Investments and substantially the entire Colombian segment of the Company for the periods of ownership noted.

in thousands of dollars

	December 1, 2015 -  September 1, 2016 $		June 19, 2015 – November 30, 2015 $
Amortization		95		63
Foreign exchange loss		4		23
General and administrative		5		3
Mineral properties expense		460		309
Professional fees		34		-
Discontinued operations expense for the year		598		398
Gain on sale of Sunward Investments Ltd.		(4,448)		-
(Income)/loss from discontinued operations for the year		(3,850)		398