10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended May 31, 2019

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from                    to                    

Commission File Number: 1-35447

TRILOGY METALS INC.

(Exact Name of Registrant as Specified in Its Charter)

British Columbia	98-1006991
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
Suite 1150, 609 Granville Street Vancouver, British Columbia Canada	V7Y 1G5
(Address of Principal Executive Offices)	(Zip Code)

(604) 638-8088

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares	TMQ	NYSE American Toronto Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company x Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of July 8, 2019, the registrant had 138,905,097 Common Shares, no par value, outstanding.

TRILOGY METALS INC.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION		2
Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	23
PART II - OTHER INFORMATION		24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information.	24
Item 6.	Exhibits	24

ii

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Trilogy Metals Inc.

Consolidated Balance Sheets

(unaudited)

in thousands of US dollars

	May 31, 2019 $			November 30, 2018 $
Assets
Current assets
Cash and cash equivalents		25,806			22,991
Accounts receivable		171			23
Deposits and prepaid amounts		1,513			619
		27,490			23,633
Rent deposit		114			114
Plant and equipment (note 3)		250			325
Mineral properties and development costs (note 4)		30,587			30,587
		58,441			54,659
Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 5)		1,481			1,657
		1,481			1,657
Mineral properties purchase option (note 4(c))		31,000			20,800
		32,481			22,457
Shareholders’ equity
Share capital (note 6) – unlimited common shares authorized, no par value Issued -132,143,407 (2018 – 131,585,612)		164,574			164,069
Warrants (note 6(c))		2,253			2,253
Contributed surplus		122			122
Contributed surplus – options (note 6(a))		20,936			19,076
Contributed surplus – units (note 6(b))		1,727			1,489
Deficit		(163,652	)		(154,807	)
		25,960			32,202
		58,441			54,659

Commitments and contingencies (note 8)

(See accompanying notes to the interim consolidated financial statements)

/s/ Rick Van Nieuwenhuyse, Director	/s/ Kalidas Madhavpeddi, Director
Approved on behalf of the Board of Directors

2

Trilogy Metals Inc.

Consolidated Statements of Loss and Comprehensive Loss

(unaudited)

in thousands of US dollars, except share and per share amounts

	For the three months ended						For the six months ended
	May 31, 2019 $			May 31, 2018 $			May 31, 2019 $			May 31, 2018 $
Expenses
Amortization		38			42			75			83
Foreign exchange loss (gain)		5			19			(29	)		(44	)
General and administrative		436			454			928			799
Investor relations		175			138			292			202
Mineral properties expense (note 4(d))		2,906			2,475			4,441			3,606
Professional fees		153			114			244			273
Salaries		282			223			563			452
Salaries – stock-based compensation		664			151			2,603			1,073
Total expenses		4,659			3,616			9,117			6,444
Other items
Loss on held for trading investments		-			125			-			260
Interest and other income		(150	)		(77	)		(272	)		(94	)
Loss and comprehensive loss for the period		4,509			3,664			8,845			6,610
Basic and diluted loss per common share	$	0.04		$	0.03		$	0.07		$	0.06
Weighted average number of common shares outstanding		132,095,920			117,583,238			132,007,414			111,989,192

(See accompanying notes to the interim consolidated financial statements)

3

Trilogy Metals Inc.

Consolidated Statements of Changes in Shareholders’ Equity

(unaudited)

in thousands of US dollars, except share amounts

	Number of shares outstanding		Share capital $			Warrants $		Contributed surplus $		Contributed surplus – options $			Contributed surplus – units $			Deficit $			Total shareholders’ equity $
Balance – November 30, 2017		105,684,523		136,525			2,163		124		18,402			1,319			(132,868	)		25,665
Exercise of options		50,753		29			-		-		(29	)		-			-			-
Restricted share units		800,000		457			-		-		-			(457	)		-			-
Stock-based compensation		-		-			-		-		484			438			-			922
Loss for the period		-		-			-		-		-			-			(2,946	)		(2,946	)
Balance – February 28, 2018		106,535,276		137,011			2,163		124		18,857			1,300			(135,814	)		23,641
Bought deal financing		24,784,482		28,750			90		-		-			-			(90	)		28,750
Share issuance costs		-		(1,819	)		-		-		-			-			-			(1,819	)
Exercise of options		28,700		5			-		-		(5	)		-			-			-
Stock-based compensation		-		-			-		-		90			61			-			151
Loss for the period		-		-			-		-		-			-			(3,664	)		(3,664	)
Balance – May 31, 2018		131,348,458		163,947			2,253		124		18,942			1,361			(139,568	)		47,059
Balance – November 30, 2018		131,585,612		164,069			2,253		122		19,076			1,489			(154,807	)		32,202
Exercise of options		44,230		28			-		-		(28	)		-			-			-
Restricted share units		412,501		424			-		-		-			(424	)		-			-
Stock-based compensation		-		-			-		-		1,586			353			-			1,939
Loss for the period		-		-			-		-		-			-			(4,336	)		(4,336	)
Balance – February 28, 2019		132,042,343		164,521			2,253		122		20,634			1,418			(159,143	)		29,805
Exercise of options		101,064		53			-		-		(53	)		-			-			-
Stock-based compensation		-		-			-		-		355			309			-			664
Loss for the period		-		-			-		-		-			-			(4,509	)		(4,509	)
Balance – May 31, 2019		132,143,407		164,574			2,253		122		20,936			1,727			(163,652	)		25,960

(See accompanying notes to the interim consolidated financial statements)

4

Trilogy Metals Inc.

Consolidated Statements of Cash Flows

(unaudited)

in thousands of US dollars

	For the six months ended
	May 31, 2019 $			May 31, 2018 $
Cash flows used in operating activities
Loss for the period		(8,845	)		(6,610	)
Items not affecting cash
Amortization		75			83
Loss on held for trading investments		-			260
Unrealized foreign exchange loss (gain)		8			(64	)
Stock-based compensation		2,603			1,073
Net change in non-cash working capital
Decrease (Increase) in accounts receivable		(148	)		441
Increase in deposits and prepaid amounts		(894	)		(67	)
Decrease in accounts payable and accrued liabilities		(176	)		(1,682	)
		(7,377	)		(6,566	)
Cash flows from (used in) financing activities
Proceeds from bought deal financing		-			28,750
Share issuance cost		-			(1,819	)
		-			26,931
Cash flows from investing activities
Acquisition of plant & equipment		-			(13	)
Mineral properties funding (note 4 (c))		10,200			9,635
Proceeds from the sale of investments, net of fees		-			2,080
		10,200			11,702
Increase in cash and cash equivalents		2,823			32,067
Effect of exchange rate on cash and cash equivalents		(8	)		11
Cash and cash equivalents – beginning of period		22,991			5,391
Cash and cash equivalents – end of period		25,806			37,469

(See accompanying notes to the interim consolidated financial statements)

5

Trilogy Metals Inc.

Notes to the Consolidated Financial Statements

1 Nature of operations

Trilogy Metals Inc. (“Trilogy” or the “Company”) was incorporated in British Columbia under the Business Corporations Act (BC) on April 27, 2011. The Company is engaged in the exploration and development of mineral properties with a focus on the Upper Kobuk Mineral Projects (“UKMP”), including the Arctic and Bornite Projects located in Northwest Alaska in the United States of America (“US”).

2 Summary of significant accounting policies

Basis of presentation

These consolidated financial statements have been prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of Trilogy and its wholly-owned subsidiary, NovaCopper US Inc. (dba “Trilogy Metals US”). All significant intercompany transactions are eliminated on consolidation.

All figures are in United States dollars unless otherwise noted. References to CAD$ refer to amounts in Canadian dollars.

These unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s financial position as of May 31, 2019 and our results of operations and cash flows for the six months ended May 31, 2019 and May 31, 2018. The results of operations for the six months ended May 31, 2019 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2019.

As these interim consolidated financial statements do not contain all of the disclosures required by U.S. GAAP for annual financial statements, these unaudited interim consolidated financial statements should be read in conjunction with the annual financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2018 filed with the U.S. Securities and Exchange Commission (“SEC”) on February 11, 2019.

These financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on July 8, 2019.

Accounting standards adopted

i. Financial instruments

In March 2016, the FASB issued new guidance on classifying and measuring financial instruments (“ASU 2016-01”). This update is effective for annual reporting periods beginning after December 15, 2017. The Company adopted the provisions of this guidance effective November 1, 2018. As the Company’s investments in equity instruments were previously classified at fair value with the change in fair value recorded to the statement of loss and comprehensive loss, the new guidance does not impact the Company’s accounting or reporting results.

Recent accounting pronouncements

ii. Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting requirements for accounting for, presentation of, and classification of leases (“ASU 2016-02”). This will result in most leases being capitalized as a right of use asset with a related liability on the balance sheets. The requirements of the new standard are effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, which for Trilogy is the first quarter of the fiscal year ending November 30, 2020. We expect the adoption will have an impact as we expect to capitalize leases, specifically our office leases which are not currently recognized on the balance sheets. We are in the process of analyzing the quantitative impact of this guidance on our results of operations and financial position. The impact of this adoption will increase asset and liability balances as part of recognizing the leases on the balance sheet.

6

3 Plant and equipment

in thousands of dollars

	May 31, 2019
	Cost $		Accumulated amortization $			Net $
British Columbia, Canada
Furniture and equipment		63		(23	)		40
Leasehold improvements		53		(14	)		39
Computer hardware and software		115		(111	)		4
Alaska, USA
Machinery, and equipment		3,178		(3,014	)		164
Vehicles		348		(346	)		2
Computer hardware and software		35		(34	)		1
		3,792		(3,542	)		250

in thousands of dollars

	November 30, 2018
	Cost $		Accumulated amortization $			Net $
British Columbia, Canada
Furniture and equipment		63		(17	)		46
Leasehold improvements		53		(10	)		43
Computer hardware and software		115		(109	)		6
Alaska, USA
Machinery, and equipment		3,178		(2,964	)		214
Vehicles		348		(333	)		15
Computer hardware and software		35		(34	)		1
		3,792		(3,467	)		325

4 Mineral properties and development costs

in thousands of dollars

	November 30, 2018 $		Acquisition costs $		May 31, 2019 $
Alaska, USA
Ambler (a)		26,587		-		26,587
Bornite (b)		4,000		-		4,000
		30,587		-		30,587

in thousands of dollars

	November 30, 2017 $		Acquisition costs $		November 30, 2018 $
Alaska, USA
Ambler (a)		26,587		-		26,587
Bornite (b)		4,000		-		4,000
		30,587		-		30,587

(a) Ambler

On January 11, 2010, NovaGold Resources Inc. (“NovaGold”), through Alaska Gold Company (“AGC”), at the time a wholly-owned NovaGold subsidiary, purchased 100% of the Ambler lands in Northwest Alaska, which contains the copper-zinc-lead-gold-silver Arctic Project and other mineralized targets within the volcanogenic massive sulfide belt, through a series of cash and share payments. Total fair value of the consideration was $26.6 million. The vendor retained a 1% net smelter return royalty that the Company can purchase at any time for a one-time payment of $10.0 million.

7

The Ambler lands were acquired on October 17, 2011 by Trilogy Metals US through a purchase and sale agreement with AGC. On October 24, 2011, NovaGold transferred its ownership of Trilogy Metals US to the Company, then itself a wholly owned subsidiary of NovaGold, which was subsequently spun-out to NovaGold shareholders and publicly listed on April 30, 2012 (“NovaGold Arrangement”).

(b) Bornite

On October 19, 2011, Trilogy Metals US acquired the exclusive right to explore and the non-exclusive right to access and enter on the Bornite lands, and lands deeded to NANA Regional Corporation, Inc. (“NANA”) through the Alaska Native Claims Settlement Act, located adjacent to the Ambler lands in Northwest Alaska. As consideration, Trilogy Metals US paid $4 million to acquire the right to explore and develop the combined Upper Kobuk Mineral Projects through an Exploration Agreement and Option to Lease with NANA. Upon a decision to proceed with construction of a mine on the lands, NANA maintains the right to purchase between a 16%-25% ownership interest in the mine or retain a 15% net proceeds royalty which is payable after Trilogy Metals US has recovered certain historical costs, including capital and cost of capital. Should NANA elect to purchase an ownership interest, consideration will be payable equal to all historical costs incurred on the properties at the elected percentage purchased less $40 million, not to be less than zero. The parties would form a joint venture and be responsible for all future costs, including capital costs of the mine based on their pro-rata share.

NANA would also be granted a net smelter return royalty of between 1% and 2.5% upon the execution of a mining lease or a surface use agreement, the amount of which is determined by the classification of land from which production originates.

(c) Option Agreement

On April 10, 2017, Trilogy and Trilogy Metals US entered into an Option Agreement to form a Joint Venture with South32 Group Operations Pty Ltd., a wholly-owned subsidiary of South32 Limited, which agreement was later assigned by South32 Operations to its affiliate, South32 USA Exploration Inc. (“South32”) on the UKMP (“Option Agreement”). Under the terms of the Option Agreement, as amended, Trilogy Metals US granted South32 the right to form a 50/50 joint venture to hold all of Trilogy Metals US’ Alaskan assets. Upon exercise of the option, Trilogy Metals US will transfer its Alaskan assets, including the UKMP, and South32 will contribute a minimum of $150 million, to a newly formed and jointly held, limited liability company (“LLC”).

To maintain the option in good standing, South32 is required to fund a minimum of $10 million per year for up to a three-year period, which funds will be used to execute a mutually agreed upon program at the UKMP. The funds provided by South32 may only be expended in accordance with an approved program by a technical committee with equal representation from Trilogy and South32. South32 may exercise its option at any time over the three-year period to enter into the 50/50 joint venture. To subscribe for 50% of the JV, South32 must contribute a minimum of $150 million, plus (i) any amounts Trilogy spends on matched parallel funding to a maximum of $16 million over the three year period and (ii) $5 million if the option had been exercised between April 1, 2018 and March 31, 2019 or $10 million if the option is exercised between April 1, 2019 and the expiration date of the option, less the amount of the initial funding contributed by South32 (the “Subscription Price”). South32 has now funded the full three-year option period. South32 has until the end of January 2020 to exercise the option to form the JV LLC and make the subscription payment. Should South32 not make its annual minimum payment or elect to withdraw, the option will lapse and South32 will have no claim to ownership or the funds it had already spent

During the year ended November 30, 2017, the Company received the first payment of $10.0 million and these funds were expended on the year 1 program at the Bornite Project. In October 2017, the Company received $0.4 million as a first instalment towards the year 2 program and budget to begin preparatory work. During the year ended November 30, 2018, the Company received payments totaling $10.4 million following the approval of the year 2 program and budget in January 2018, including a $0.80 million advance on South32’s year three funding obligation per the Option Agreement. During the quarter ended February 28, 2019, the Company received payments totaling $10.2 million following the approval of the year 3 program and budget, including $1 million funding for the approved regional exploration program. The receipt of the year 3 funding represents receipt of the final tranche of funding from South32. The Company is responsible for the disbursement of these funds in accordance with the approved program and budget and accordingly has not classified the funds as restricted cash.

8

As the initial option payments are credited against the future subscription price upon exercise, the Company has accounted for the payments received from South32 as deferred consideration for the purchase of the UKMP interest. At such time as the option is exercised, the $31.0 million of payments received will be recognized as part of the consideration received for the Company’s contribution of the UKMP into JV LLC. If South32 withdraws from the Option Agreement, the consideration will be recognized as income in the statement of loss at that time.

The option to form the JV LLC is recognized as a financial instrument at inception of the arrangement with an initial fair value of $nil. This option is required to be re-measured at fair value at each reporting date with any changes in fair value recorded in loss for the period. The Company determined that the fair value of the option remains $nil as at May 31, 2019.

(d) Mineral properties expense

The following table summarizes mineral properties expense for the noted periods.

In thousands of dollars

	Three months ended May 31, 2019 $		Three months ended May 31, 2018  $			Six months ended May 31, 2019  $			Six months ended May 31, 2018  $
Alaska, USA
Community		146		154			264			244
Drilling		173		180			173			180
Engineering		303		186			624			505
Environmental		136		81			271			169
Geochemistry and geophysics		593		591			758			646
Land and permitting		174		166			360			359
Project support		778		601			1,004			677
Other income		-		(2	)		(1	)		(20	)
Wages and benefits		603		518			988			846
Mineral property expense		2,906		2,475			4,441			3,606

Mineral property expenses consist of direct drilling, personnel, community, resource reporting and other exploration expenses as outlined above, as well as indirect project support expenses such as fixed wing charters, helicopter support, fuel, and other camp operation costs. Cumulative mineral properties expense in Alaska from the initial earn-in agreement on the property in 2004 to May 31, 2019 is $99.0 million and cumulative acquisition costs are $30.6 million totaling $129.6 million spent to date.

5 Accounts payable and accrued liabilities

in thousands of dollars

	May 31, 2019 $		November 30, 2018 $
Trade accounts payable		834		400
Accrued liabilities		474		503
Accrued salaries and vacation		173		746
Due to related parties		-		8
Accounts payable and accrued liabilities		1,481		1,657

9

6 Share capital

Authorized:

unlimited common shares, no par value

In thousands of dollars, except share amounts

	Number of shares		Ascribed value $
November 30, 2017		105,684,523		136,525
Bought deal financing		24,784,482		28,750
Share issuance costs		-		(1,805	)
Exercise of options		315,148		140
Restricted share units		800,000		457
NovaGold DSU conversion		1,459		2
November 30, 2018		131,585,612		164,069
Exercise of options		145,294		81
Restricted share units		412,501		424
May 31, 2019, issued and outstanding		132,143,407		164,574

On April 30, 2012, under the NovaGold Arrangement, Trilogy committed to issue common shares to satisfy holders of NovaGold deferred share units (“NovaGold DSUs”) on record as of the close of business April 27, 2012. When vested, Trilogy committed to deliver one Common Share to the holder for every six shares of NovaGold the holder is entitled to receive, rounded down to the nearest whole number. As of May 31, 2019, there remains 11,927 NovaGold DSUs outstanding representing a right to receive 1,988 Common Shares in Trilogy, which will settle upon certain directors retiring from NovaGold’s board.

On April 20, 2018, the Company completed a bought-deal financing for gross proceeds of $28.7 million by issuing 24,784,482 common shares at $1.16 per common share. Expenses including bank commissions, legal fees, stock exchange and other fees totaled $1.8 million for net proceeds of $26.9 million.

(a) Stock options

During the period ended May 31, 2019, the Company granted 2,527,500 options (2018 – 2,125,000 options) at a weighted-average exercise price of CAD$2.96 (2018 – CAD$1.04) to employees, consultants and directors exercisable for a period of five years with various vesting terms from immediate vesting to over a two-year period. The weighted-average fair value attributable to options granted in the period was $1.08 (2018 - $0.37).

For the period ended May 31, 2019, Trilogy recognized a stock-based compensation charge of $1.94 million (2018– $0.58 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

The recognized fair value of the stock options granted in the period has been estimated using the Black-Scholes option pricing model.

Assumptions used in the pricing model for the period are as provided below.

	May 31, 2019
Risk-free interest rates		2.03	%
Exercise price		CAD$3.01
Expected life		3.0 years
Expected volatility		75.0	%
Expected dividends		Nil

As of May 31, 2019, there were 1,841,672 non-vested options outstanding with a weighted average exercise price of $1.79; the non-vested stock option expense not yet recognized was $0.90 million. This expense is expected to be recognized over the next two years.

10

A summary of the Company’s stock option plan and changes during the period ended May 31, 2019 is as follows:

	May 31, 2019
	Number of options			Weighted average exercise price $
Balance – beginning of the period		8,821,434			0.60
Granted		2,527,500			2.19
Exercised		(219,153	)		0.77
Balance – end of period		11,129,781			0.95

The following table summarizes information about the stock options outstanding at May 31, 2019.

	Outstanding						Exercisable				Unvested
Range of price	Number of outstanding options		Weighted average years to expiry		Weighted average exercise price $		Number of exercisable options		Weighted average exercise price $		Number of unvested options
$0.33 to $0.50		3,920,614		1.22		0.38		3,920,614		0.38		-
$0.51 to $1.00		4,346,667		2.45		0.71		3,898,331		0.70		448,336
$1.01 to $1.50		225,000		3.87		1.31		125,000		1.22		100,000
$1.51 to $2.00		120,000		4.11		1.79		86,666		1.76		33,334
$2.01 to $2.52		2,517,500		4.53		2.19		1,257,498		2.19		1,260,002
		11,129,781		2.53		0.95		9,288,109		0.79		1,841,672

The aggregate intrinsic value of vested share options (the market value less the exercise price) at May 31, 2019 was $17.6 million (2018 - $5.9 million) and the aggregate intrinsic value of exercised options for the six months ended May 31, 2019 was $0.3 million (2018 - $0.1 million).

(b) Restricted Share Units and Deferred Share Units

The Company has a Restricted Share Unit Plan (“RSU Plan”) and a Non-Executive Director Deferred Share Unit Plan (“DSU Plan”) to provide long-term incentives to employees, officers and directors. Awards under the RSU Plan and DSU Plan may be settled in cash and/or common shares of the Company at the Company’s election with each restricted share unit (“RSU”) and deferred share unit (“DSU”) entitling the holder to receive one common share of the Company or equivalent value. All units are accounted for as equity-settled awards.

11

A summary of the Company’s unit plans and changes during the period ended May 31, 2019 is as follows:

	Number of RSUs			Number of DSUs
Balance – beginning of the period		400,002			1,182,106
Granted		225,000			104,489
Vested/paid		(412,501	)		-
Balance – end of period		212,501			1,286,595

For the period ended May 31, 2019, Trilogy recognized a stock-based compensation charge of $0.66 million (2018- $0.49 million), net of estimated forfeitures.

As part of the annual incentive payout for the 2018 fiscal year, 225,000 RSUs were granted to officers, vesting half on the grant date and half on the first anniversary of the grant date. RSUs vesting in December 2018 were settled on December 21, 2018 through the issuance of 412,501 common shares.

(c) Share Purchase Warrants

A summary of the Company’s warrants and changes during the period ended May 31, 2019 is as follows:

	Number of warrants		Years to expiry		Exercise price $
Balance – beginning of the period		6,521,740		0.59		1.52
Balance – end of period		6,521,740		0.09		1.52

7 Financial instruments

The Company is exposed to a variety of risks arising from financial instruments. These risks and management’s objectives, policies and procedures for managing these risks are disclosed as follows.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities. The fair value of the Company’s financial instruments approximates their carrying value due to the short-term nature of their maturity. The Company’s financial instruments initially measured at fair value and then held at amortized cost include cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities. The Company’s investments were held for trading and were marked-to-market at each period end with changes in fair value recorded to the statement of loss.

Financial risk management

The Company’s activities expose it to certain financial risks, including currency risk, credit risk, liquidity risk, interest risk and price risk.

(a) Currency risk

Currency risk is the risk of a fluctuation in financial asset and liability settlement amounts due to a change in foreign exchange rates. The Company operates in the United States and Canada. The Company’s exposure to currency risk at May 31, 2019 is limited to Canadian dollar consisting of cash of CDN$244,000, accounts receivable of CDN$26,000 and accounts payable of CDN$442,000. Based on a 10% change in the US-Canadian exchange rate, assuming all other variables remain constant, the Company’s net loss would change by approximately $13,000.

(b) Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company holds cash and cash equivalents with Canadian Chartered financial institutions. The Company’s accounts receivable consists of Canadian Goods and Services Tax receivable from the Federal Government of Canada and other receivables for recoverable expenses. The Company’s exposure to credit risk is equal to the balance of cash and cash equivalents and accounts receivable as recorded in the financial statements.

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(c) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulties raising funds to meet its financial obligations as they fall due. The Company is in the exploration stage and does not have cash inflows from operations; therefore, the Company manages liquidity risk through the management of its capital structure and financial leverage.

Contractually obligated cash flow requirements as at May 31, 2019 are as follows:

in thousands of dollars

	Total $		< 1 Year $		1–2 Years $		2–5 Years $		Thereafter $
Accounts payable and accrued liabilities		1,481		1,481		-		-		-
		1,481		1,481		-		-		-

(d) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk with respect to interest earned on cash and cash equivalents. Based on balances as at May 31, 2019, a 1% change in interest rates would result in a change in net loss of $0.3 million, assuming all other variables remain constant.

8 Commitment

The Company has commitments with respect to office and warehouse leases requiring future minimum lease payments as follows:

in thousands of dollars

	May 31, 2019 $
One year		231
Years 2 through 5		457
Beyond 5 years		414
Total		1,102

9 Subsequent events

On June 28, 2019, the Company announced all its outstanding warrants were exercised in advance of the July 2, 2019 expiry date.  As a result of the warrants exercised, the Company issued a total of 6,521,740 common shares and received cash proceeds of approximately $9.9 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Trilogy Metals Inc.

Management’s Discussion and Analysis

(expressed in US dollars)

Cautionary notes

Forward-looking statements

This Management’s Discussion and Analysis contains “forward-looking information” and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other applicable securities laws. These forward-looking statements may include statements regarding perceived merit of properties, the timing and filing of updated technical reports, the timing of permitting, exploration results and budgets, mineral reserves and resource estimates, work programs, capital expenditures, operating costs, cash flow estimates, production estimates and similar statements relating to the economic viability of a project, timelines, strategic plans, statements regarding the Company’s plans and expectations relating to its Upper Kobuk Mineral Projects, market prices for precious and base metals, or other statements that are not statements of fact. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Statements concerning mineral resource estimates may also be deemed to constitute “forward-looking statements” to the extent that they involve estimates of the mineralization that will be encountered if the property is developed.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible” or variations thereof or stating that certain actions, events, conditions or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

Forward-looking statements are based on a number of material assumptions, including those listed below, which could prove to be significantly incorrect:

· assumptions made in the interpretation of drill results, and of the geology, grade and continuity of the Company’s mineral deposits;

· our ability to achieve production at any of the Company’s mineral exploration and development properties;

· our expected ability to develop adequate infrastructure and that the cost of doing so will be reasonable;

· assumptions that all necessary permits and governmental approvals will be obtained;

· estimated capital costs, operating costs, production and economic returns;

· estimated metal pricing, metallurgy, mineability, marketability and operating and capital costs, together with other assumptions underlying the Company’s resource and reserve estimates;

· continued good relationships with local communities and other stakeholders;

· our expectations regarding demand for equipment, skilled labour and services needed for exploration and development of mineral properties;

· assumptions regarding the merit of litigation; and

· that our activities will not be adversely disrupted or impeded by development, operating or regulatory risks.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation:

· risks related to inability to define proven and probable reserves;

· risks related to our ability to finance the development of our mineral properties through external financing, strategic alliances, the sale of property interests or otherwise;

· none of the Company’s mineral properties are in production or are under development;

· uncertainty as to whether South32 will exercise its option under the Option Agreement;

· uncertainties relating to the assumptions underlying our resource estimates, such as metal pricing, metallurgy, mineability, marketability and operating and capital costs;

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· risks related to lack of infrastructure including but not limited to the risk whether or not the Ambler Mining District Industrial Access Project (“AMDIAP”) will receive the requisite permits and, if it does, whether Alaska Industrial Development Export Authority will build the AMDIAP;

· uncertainty as to whether there will ever be production at the Company’s mineral exploration and development properties;

· uncertainty as to estimates of capital costs, operating costs, production and economic returns;

· risks related to our ability to commence production and generate material revenues or obtain adequate financing for our planned exploration and development activities;

· risks related to future sales or issuances of equity securities decreasing the value of existing Trilogy common shares, diluting voting power and reducing future earnings per share;

· risks related to market events and general economic conditions;

· uncertainty related to inferred mineral resources;

· uncertainty related to the economic projections derived from the Pre-Feasibility Study titled “Arctic Project, Northwest Alaska, USA, NI 43-101 technical report on Pre-Feasibility Study” dated effective February 20, 2018;

· risks related to inclement weather which may delay or hinder exploration activities at its mineral properties;

· risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of our mineral deposits;

· mining and development risks, including risks related to infrastructure, accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in development, construction or production;

· the risk that permits and governmental approvals necessary to develop and operate mines at our mineral properties will not be available on a timely basis or at all;

· commodity price fluctuations;

· risks related to governmental regulation and permits, including environmental regulation, including the risk that more stringent requirements or standards may be adopted or applied due to circumstances unrelated to the Company and outside of its control;

· risks related to the need for reclamation activities on our properties and uncertainty of cost estimates related thereto;

· uncertainty related to title to our mineral properties;

· our history of losses and expectation of future losses;

· risks related to increases in demand for equipment, skilled labor and services needed for exploration and development of mineral properties, and related cost increases;

· our need to attract and retain qualified management and technical personnel;

· risks related to conflicts of interests of some of our directors and officers;

· risks related to potential future litigation;

· risks related to the voting power of our major shareholders and the impact that a sale by such shareholders may have on our share price;

· risks related to global climate change;

· risks related to adverse publicity from non-governmental organizations;

· uncertainty as to the volatility in the price of the Company’s shares;

· the Company’s expectation of not paying cash dividends;

· adverse federal income tax consequences for U.S. shareholders should the Company be a passive foreign investment company;

· uncertainty as to our ability to maintain the adequacy of internal control over financial reporting as per the requirements of Section 404 of the Sarbanes-Oxley Act; and

· increased regulatory compliance costs, associated with rules and regulations promulgated by the United States Securities and Exchange Commission (the “SEC”), Canadian Securities Administrators, the NYSE American, the TSX, and the Financial Accounting Standards Boards, and more specifically, our efforts to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act and the newly adopted SEC mining disclosure rules.

This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in Trilogy’s Form 10-K dated February 11, 2019, filed with the Canadian securities regulatory authorities and the SEC, and other information released by Trilogy and filed with the appropriate regulatory agencies.

The Company’s forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and the Company does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change, except as required by law. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

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Cautionary note to United States investors

Reserve and resource estimates

This Management’s Discussion and Analysis has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of U.S. securities laws. Unless otherwise indicated, all resource and reserve estimates included in this Management’s Discussion and Analysis have been prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards on Mineral Resources and Mineral Reserves. NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Canadian standards, including NI 43-101, differ significantly from the requirements of the SEC, and resource and reserve information contained herein may not be comparable to similar information disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserves”. Under U.S. standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. The SEC’s disclosure standards normally do not permit the inclusion of information concerning “measured mineral resources”, “indicated mineral resources” or “inferred mineral resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by U.S. standards in documents filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. U.S. investors should also understand that “inferred mineral resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. Under Canadian rules, estimated “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies except in rare cases. Investors are cautioned not to assume that all or any part of an “inferred mineral resource” exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in-place tonnage and grade without reference to unit measures. The requirements of NI 43-101 for identification of “reserves” are also not the same as those of the SEC, and reserves reported by the Company in compliance with NI 43-101 may not qualify as “reserves” under SEC standards. Accordingly, information concerning mineral deposits set forth herein may not be comparable with information made public by companies that report in accordance with U.S. standards.

General

This Management’s Discussion and Analysis (“MD&A”) of Trilogy Metals Inc. (“Trilogy”, “Trilogy Metals”, “the Company” or “we”) is dated July 8, 2019 and provides an analysis of our unaudited interim financial results for the quarter ended May 31, 2019 compared to the quarter ended May 31, 2018.

The following information should be read in conjunction with our May 31, 2019 unaudited interim consolidated financial statements and related notes which were prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The MD&A should also be read in conjunction with our audited consolidated financial statements and related notes for the year ended November 30, 2018. A summary of the U.S. GAAP accounting policies is outlined in note 2 of the audited consolidated financial statements. All amounts are in United States dollars unless otherwise stated. References to “Canadian dollars” and “C$” and “CDN$” are to the currency of Canada and references to “U.S. dollars”, “$” or “US$” are to the currency of the United States.

Andrew W. West, P.Geo., an employee and Exploration Manager, is a Qualified Person under National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”), and has approved the scientific and technical information in this MD&A.

Trilogy’s shares are listed on the Toronto Stock Exchange (“TSX”) and the NYSE American Stock Exchange (“NYSE American”) under the symbol “TMQ”. Additional information related to Trilogy, including our annual report on Form 10-K, is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Description of business

We are a base metals exploration company focused on exploring and developing our mineral holdings in the Ambler mining district located in Alaska, U.S.A. We conduct our operations through a wholly-owned subsidiary, NovaCopper US Inc. which is doing business as Trilogy Metals US (“Trilogy Metals US”). Our Upper Kobuk Mineral Projects, (“UKMP” or “UKMP Projects”), consist of: i) the 100% owned Ambler lands which host the Arctic copper-zinc-lead-gold-silver Project (the “Arctic Project”); and ii) the Bornite lands being explored under a collaborative long-term agreement with NANA Regional Corporation, Inc. (“NANA”), a regional Alaska Native Corporation, which host the Bornite carbonate-hosted copper Project (the “Bornite Project”).

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Outlook & Project activities

Arctic Project

The $7.0 million engineering and environmental program, which will be funded entirely by Trilogy, has commenced at Arctic with two rigs from Tuuq Drilling LLC currently in operation at the site. Work at the Arctic deposit commenced in late June with a view of completing feasibility level geotechnical and hydrology work. The main goal of this year’s work program is to complete engineering and environmental studies to prepare a National Instrument 43-101 compliant feasibility study which results are anticipated to be released in the first half of 2020. Work is also being done to prepare the Arctic Project for permitting, which we expect to commence in 2020. The permitting preparation work being carried out will support Federal, State and Borough permitting requirements.

Bornite Project

Exploration activities commenced at the beginning of June with more than 2,000 meters of drilling completed so far at the Bornite Project with three rigs from Major Drilling America, Inc. currently in operation at site. The main goal of the $9.2 million program will be to drill approximately 8,000 meters within 12 holes and will include both infill and expansion drilling. Drilling is anticipated to continue throughout the summer and results from the first few holes of this program are expected to be release in late summer. South32 Limited (“South32”) funded the entire $9.2 million budget in which funds were fully received during the first quarter maintaining the Option Agreement as defined below in good standing.

Regional Exploration

District-wide VTEM and ZTEM helicopter airborne geophysical surveys were completed this spring along the entire 100-kilometer long belt of the favorable stratigraphy hosting known polymetallic volcanogenic-massive sulphide (“VMS”) deposits, as well as the areas around the Bornite deposit and the surrounding Cosmos Hills area. The surveys were flown by Geotech Ltd. and the data is currently being re-processed by Resource Potential PTY Ltd. The new VTEM and ZTEM surveys will be integrated into our dataset of historical drilling accumulated over a 40-year period of exploration, all of which has been geo-referenced into an integrated GIS database. This dataset will be analyzed to determine and prioritize targets for drill testing later in the summer after the Arctic environmental and geotechnical drill program has been completed. The Company and South32 have agreed to equally fund the Regional Exploration budget. Funds were received during the first quarter from South32 for their $1.0 million contribution, which is in excess of the original $30 million in option payments.

Property review

Our principal assets, the UKMP Projects, are located in the Ambler mining district in Northwest Alaska. Our UKMP Projects comprise approximately 355,323 acres (143,794 hectares) consisting of the Ambler and Bornite lands.

Arctic Project

The Ambler lands, which host several deposits, including the high-grade copper-zinc-lead-gold-silver Arctic Project, and other mineralized targets within a 100-kilometer-long VMS belt, are owned by NovaCopper US. The Ambler lands are in Northwestern Alaska and consist of 114,500 acres (46,337 hectares) of Federal patented mining claims and State of Alaska mining claims, within which VMS mineralization has been found.

We have recorded the Ambler lands as a mineral property with acquisition costs capitalized and exploration costs expensed in accordance with our accounting policies.

Bornite Project

On October 19, 2011, Trilogy Metals US and NANA signed a collaborative agreement to explore and develop the Ambler mining district. Under the Exploration Agreement and Option to Lease (the “NANA Agreement”), we acquired, in exchange for, among other things, a $4.0 million cash payment to NANA, the exclusive right to explore the Bornite property and lands deeded to NANA through the Alaska Native Claims Settlement Act (“ANCSA”), located adjacent to the Arctic Project, and the non-exclusive right to access and entry onto NANA’s lands. The agreement establishes a framework for any future development of either the Bornite Project or the Arctic Project. Both projects are included as part of a larger area of interest set forth in the NANA Agreement. The agreement with NANA created a total land package incorporating our Ambler lands with the adjacent Bornite and ANCSA lands with a total area of approximately 355,323 acres (143,794 hectares).

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Upon the decision to proceed with development of a mine within the area of interest, NANA maintains the right to purchase an ownership interest in the mine equal to range between 16%-25% or retain a 15% net proceeds royalty which is payable after we have recovered certain historical costs, including capital and cost of capital. Should NANA elect to purchase an ownership interest in the mine, consideration will be payable based on the elected percentage purchased and all the costs incurred on the properties less $40.0 million, not to be less than zero. The parties would form a joint venture and be responsible for all future costs incurred in connection with the mine, including capital costs of the mine, based on each party’s pro-rata share.

NANA would also be granted a net smelter return royalty between 1% and 2.5% upon the execution of a mining lease or a surface use agreement, the amount of which is determined by the particular area of land from which production originates.

We have accounted for the Bornite property as a mineral property with acquisition costs capitalized and exploration costs expensed in accordance with our accounting policies.

South32 Option Agreement

On April 10, 2017, Trilogy and Trilogy Metals US entered into an Option Agreement to form a Joint Venture with South32 Group Operations Pty Ltd., a wholly-owned subsidiary of South32 Limited, which agreement was later assigned by South32 Operations to its affiliate, South32 USA Exploration Inc. on the UKMP (“Option Agreement”). Under the terms of the Option Agreement, as amended, Trilogy Metals US granted South32 the right to form a 50/50 joint venture to hold all of Trilogy Metals US’ Alaskan assets. Upon exercise of the option, Trilogy Metals US will transfer its Alaskan assets, including the UKMP, and South32 will contribute a minimum of $150 million, to a newly formed and jointly held, limited liability company (“LLC”).

To maintain the option in good standing, South32 is required to fund a minimum of $10 million per year for up to a three-year period, which funds will be used to execute a mutually agreed upon program at the UKMP. The funds provided by South32 may only be expended in accordance with an approved program by a technical committee with equal representation from Trilogy and South32. South32 may exercise its option at any time over the three-year period to enter into the 50/50 joint venture. To subscribe for 50% of the JV, South32 must contribute a minimum of $150 million, plus (i) any amounts Trilogy spends on matched parallel funding to a maximum of $16 million over the three year period and (ii) $5 million if the option is exercised between April 1, 2018 and March 31, 2019 or $10 million if the option is exercised between April 1, 2019 and the expiration date of the option, less the amount of the initial funding contributed by South32 (the “Subscription Price”). South32 has now funded the full three-year option period. South32 has until the end of January 2020 to exercise the option to form the JV LLC and make the subscription payment.

Option Funding Phase

Provided that all the exploration data and information has been made available to South32 by no later than December 31 of each year, South32 must decide by the end of January of the following year whether; (i) to fund a further tranche of a minimum of $10 million, or (ii) to withdraw and not provide any further annual funding. In years 1 and 2, if the election to fund a further tranche is not made in January, South32 has until the end of March to exercise the option to form the LLC and make the subscription payment. If South32 elects to exercise the option, the Subscription Price shall be paid in one tranche within 45 business days. Should South32 not make its annual minimum payment or elect to withdraw, the option will lapse and South32 will have no claim to ownership or the funds it had already spent. The option payment for the first year was paid by South32 in April 2017 and expended on the Year 1 exploration program at the Bornite Project. Early in December 2017, South32 committed to fund the $10 million 2018 program for the Bornite Project. The funds, which represent the second tranche, maintain the Option Agreement in good standing, and were fully received on January 24, 2018. An additional $0.80 million was received during the year ended November 30, 2018 from South32 as an advance on the year three funding.

On January 31, 2019, we announced the 2019 program and budgets with South32 committing to fund the $9.2 million budget for the Bornite Project. The funds, which represent the third and final tranche, maintain the Option Agreement in good standing, and were fully received during the quarter ended February 28, 2019.

Subscription Funding Phase

At any time during the option funding phase of the agreement, South32 may elect to subscribe for a 50% interest in a newly formed LLC which will take transfer of, and hold, Trilogy Metals US’ Alaskan Assets. As part of the Subscription Price, South32 will match any spending expended by us at the Arctic Project over 3 years (2017, 2018 and 2019), to a cumulative maximum of $16 million. Depending on when the option is exercised, certain amounts of the Initial Funding will be deducted from the Subscription Price.

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Trilogy currently estimates that the Subscription Price would fund the UKMP through feasibility and the permitting of the first mine to be developed in the Ambler mining district. Once the full amount of the subscription payment of approximately $150 million is expended, the parties will contribute funding pro rata, as contemplated by the operating agreement which will govern the LLC (the “LLC Agreement”). The LLC Agreement anticipates a General Manager, Chief Financial Officer and Chief Operating and Technical Officer to be appointed by the LLC’s Board, which will have equal representation from Trilogy and South32.

As the initial option payments are credited against the future subscription price upon exercise, we have accounted for the payment received as deferred consideration. At such time as the option is exercised, the initial payments received to that date will be recognized as part of the consideration received for our contribution of the Alaska assets, including the UKMP, into the joint venture. If South 32 withdraws from the Option Agreement, the consideration will be recognized in the statement of loss at that time.

Summary of results

in thousands of dollars, except for per share amounts

	Three months ended				Six months ended
Selected expenses	May 31, 2019 $		May 31, 2018 $		May 31, 2019 $		May 31, 2018 $
General and administrative		436		454		928		799
Mineral properties expense		2,906		2,475		4,441		3,606
Professional fees		153		114		244		273
Salaries		282		223		563		452
Salaries – stock-based compensation		664		151		2,603		1,073
Investor relations		175		138		292		202
Loss and comprehensive loss for the period		4,509		3,664		8,845		6,610
Basic and diluted loss per common share	$	0.04	$	0.03	$	0.07	$	0.06

For the three month period ended May 31, 2019, Trilogy reported a net loss of $4.5 million (or $0.04 basic and diluted loss per common share) which was higher than the net loss of $3.7 million for the comparative period in 2018 (or $0.03 basic and diluted loss per common share).

The differences in relation to the comparative three month period ended May 31, 2018 are primarily due to: i) an increase of $0.4 million in mineral properties expense mostly consisting of engineering work related to the scoping study for Bornite and Arctic projects, environmental work related to meteorological and air quality study for the Arctic project during the second quarter of 2019, personnel costs and project support costs including camp facilities repair and maintenance, fixed wing costs and set-up costs incurred for the new office and warehouse in Fairbanks; and ii) an increase of $0.5 million in stock-based compensation due to a higher share price contributing to a higher fair value vesting for stock options, RSUs and DSUs granted during the six month period ended May 31, 2019.

Other differences noted for the comparable periods were: i) an increase in salaries as the current period includes compensation for a new hire during the third quarter of 2018 for which there is no comparative for the second quarter of 2018; ii) an increase in professional fees due to an increase in accounting and audit fees; iii) an increase in investor relations expenses due to the Company’s increased level of marketing activity including attendance at more investor conferences and meetings in the current period; and iv) a slight decrease in general and administrative expenses in the current period.

The comparative period also included a $0.1 million loss on held for trading investments resulting from the disposition of 725,000 common shares of Gold Mining Inc. (“GMI”) for which there are no comparative figures for the three month period ended May 31, 2019 as the remaining investment in GMI was fully disposed during fiscal 2018.

For the six month period ended May 31, 2019, Trilogy reported a net loss of $8.8 million (or $0.07 basic and diluted loss per common share) compared to a net loss of $6.6 million for the corresponding period in 2018 (or $0.06 basic and diluted loss per common share).

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The differences in relation to the comparative six month period ended May 31, 2018 are primarily due to: i) an increase of $0.8 million in mineral properties expense mostly consisting of Geophysics work including core scan work for the Arctic project, aerial electromagnetic survey for Bornite and the region, engineering work related to additional metallurgical and scoping studies, environmental work related to meteorological and air quality study, personnel costs and project support costs including camp facilities repair and maintenance, and fixed wing costs and set-up costs incurred for the new office and warehouse in Fairbanks; ii) an increase of $1.5 million in stock-based compensation due to a higher share price contributing to a greater fair value amortization of stock options, RSUs and DSUs granted during the six month period ended May 31, 2019; iii) an increase of $0.1 million in general and administration costs; iv) an increase of $0.9 million in investor relations expenses due to the Company’s increased level of marketing activity including attendance at more investor conferences and meetings during the six month period ended May 31, 2019 and v) an increase of $0.1 million in salaries due to a new hire during the third quarter of 2018 for which there is no comparative for the six month period ended May 31, 2018.

During the six month period ended May 31, 2018, the Company recorded a loss on held for trading investments of $0.3 million upon disposition of 2,085,000 common shares of GMI for which there are no comparative figures for the six month period ended May 31, 2019 as the remaining investment in GMI was fully disposed during fiscal 2018.

Selected financial data

Quarterly information

In thousands of dollars,

except per share amounts

	Q2 2019			Q1 2019			Q4 2018			Q3 2018			Q2 2018			Q1 2018			Q4 2017			Q3 2017
	05/31/19			02/28/19			11/30/18			08/31/18			05/31/18			02/28/17			11/30/17			08/31/17
	$			$			$			$			$			$			$			$
Interest and other income		150			122			117			135			77			17			13			23
Mineral property expenses		2,906			1,535			3,833			9,051			2,475			1,131			4,693			8,471
Earnings (loss) for the period		(4,509	)		(4,336	)		(5,319	)		(9,920	)		(3,664	)		(2,946	)		(6,726	)		(8,992	)
Earnings (loss) per common share – basic and diluted		(0.04	)		(0.03	)		(0.04	)		(0.08	)		(0.03	)		(0.03	)		(0.06	)		(0.09	)

Factors that can cause fluctuations in our quarterly results include the length of the exploration field season at the properties, the type of program conducted, stock option vesting, and issuance of shares. Other factors that have caused fluctuations in the quarterly results that would not be expected to re-occur include the acquisition and disposition of GMI shares and financing activities.

During the quarter ended May 31, 2019, mineral property expense increased by $1.4 million when compared to the prior quarter as the Company prepared for the commencement of the 2019 drill program and field season. Our loss of $4.5 million for the quarter ended May 31, 2019 is consistent with the prior quarter as the increase in the second quarter mineral property expenses were offset by higher first quarter stock-based compensation due to the fair value amortization of new option grants during the first quarter. The current period loss is $0.9 million higher when compared to the loss for the second quarter ended May 31, 2018 of $3.7 million due mostly to an increase in mineral properties expense and stock-based compensation.

Our loss for the first quarter ended February 28, 2019 of $4.3 million was lower when compared to the two prior quarterly periods and reflects the seasonality of the mineral property expenses which are mostly incurred during the summer and fall season.

During the fourth quarter of 2018, we had a loss of $5.3 million compared to a loss of $6.7 million in the fourth quarter of 2017. The primary drivers for the difference were $0.9 million lower mineral properties expenses, loss on disposition of investments of $0.8 million in the fourth quarter of 2017 for which the comparative is nil in the fourth quarter 2018, all offset by $0.5 million in increased salaries benefits in the fourth quarter 2018. We incurred $3.8 million of mineral property expenses in the fourth quarter of 2018 compared to $4.7 million of mineral property expenses in the fourth quarter of 2017 as the camp closed earlier in the 2018 program (October 13, 2018) versus the 2017 program (October 31, 2017).

Similarly, our loss for the third quarter ended August 31, 2018 of $9.9 million is slightly higher than the comparable loss of $9.0 million in the third quarter ended August 31, 2017 due to the size of the 2018 field program which added an additional $0.6 million in mineral property expenses. The remaining $0.3 million difference is mostly due to increased general and administrative expenses, salaries and stock-based compensation.

Liquidity and capital resources

At May 31, 2019, we had $25.8 million in cash and cash equivalents and working capital of $26.0 million. The increase in cash was a result of fully receiving the $9.2 million Year 3 funding from South32 as well as an additional $1.0 million for the regional exploration program. The increase in working capital for the period was a result of higher accounts receivable and prepaids balances as well as a lower accounts payable balance as at May 31, 2019. Subsequent to the end of the second quarter, the Company received additional proceeds of approximately $9.9 million as a result of an exercise of 6,521,740 warrants.

20

We expended $7.4 million on operating activities during the six months ended May 31, 2019 compared with $6.6 million for operating activities for the same period in 2018. Most cash spent on operating activities during all periods was expended on mineral property expenses, general and administrative, salaries and professional fees.

The Company continues to fund its cash expenditures through its working capital. As the Company is not currently in production, the Company will need to raise additional funds to support its operations and administration expenses in the future. Future sources of liquidity may include debt financing, equity financing, convertible debt, exercise of options, or other means. The continued operations of the Company are dependent on its ability to obtain additional financing or to generate future cash flows.

All cash generated from investing activities during the six months ended May 31, 2019 were from the South 32 Option Agreement funding of $10.2 million (2018 - $9.6 million) and there were no proceeds from the sale of investments (2018 - $2.1 million) as all GMI shares were full disposed during fiscal 2018. During the six months ended May 31, 2019, no cash was generated from financing activities (2018 - $26.9 million).

Contractual obligations

Contractual obligated undiscounted cash flow requirements as at May 31, 2019 are as follows.

In thousands of dollars

	Total		< 1 Year		1–2 Years		2–5 Years		Thereafter
	$		$		$		$		$
Accounts payable and accrued liabilities		1,481		1,481		-		-		-
Office lease		963		174		375		414		-
Office and warehouse lease		139		57		82		-		-
		2,583		1,712		457		414		-

Off-balance sheet arrangements

We have no material off-balance sheet arrangements. The Company has lease commitments for office and warehouse spaces with a remaining total commitment of $1.1 million.

Outstanding share data

At July 8, 2019, we had 138,905,097 common shares issued and outstanding. At July 8, 2019, we had outstanding 11,042,502 stock options with a weighted-average exercise price of $0.98. We also had, 1,286,595 deferred share units (“DSUs”), 11,927 NovaGold deferred share units entitling the holder to receive one common share for every six NovaGold shares received, and 212,501 RSUs. Upon exercise of all the foregoing convertible securities, the Company would be required to issue aggregate of 12,543,586 common shares.

New accounting pronouncements

Certain recent accounting pronouncements have been included under note 2 in our May 31, 2019 unaudited interim consolidated financial statements

Critical accounting estimates

The most critical accounting estimates upon which our financial status depends are those requiring estimates of the recoverability of our capitalized mineral properties, impairment of long-lived assets, income taxes and valuation of stock-based compensation.

Mineral properties and development costs

All direct costs related to the acquisition of mineral property interests are capitalized. The acquisition of title to mineral properties is a complicated and uncertain process. The Company has taken steps, in accordance with industry standards, to verify the title to mineral properties in which it has an interest. Although the Company has made efforts to ensure that legal title to its mining assets is properly recorded, there can be no assurance that such title will be secured indefinitely.

21

Impairment of long-lived assets

Management assesses the possibility of impairment in the carrying value of its long-lived assets whenever events or circumstances indicate that the carrying amounts of the asset or asset group may not be recoverable. Significant judgments are made in assessing the possibility of impairment. Management considers several factors in considering if an indicator of impairment has occurred, including but not limited to, indications of value from external sources, significant changes in the legal, business or regulatory environment, and adverse changes in the use of physical condition of the asset. These factors are subjective and require consideration at each period end. If an indicator of impairment is determined to exist, management calculates the estimated undiscounted future net cash flows relating to the asset or asset group using estimated future prices, mineral resources, and operating, capital and reclamation costs. When the carrying value of an asset exceeds the related undiscounted cash flows, the asset is written down to its estimated fair value, which is usually determined using discounted future cash flows. Management’s estimates of mineral prices, mineral resources, foreign exchange rates, production levels and operating capital and reclamation costs are subject to risk and uncertainties that may affect the determination of the recoverability of the long-lived asset.

Income taxes

We must make estimates and judgments in determining the provision for income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits including interest and penalties. We are subject to income tax law in the United States and Canada. The evaluation of tax liabilities involving uncertainties in the application of complex tax regulation is based on factors such as changes in facts or circumstances, changes in tax law, new audit activity, and effectively settled issues. The evaluation of an uncertain tax position requires significant judgment, and a change in such recognition would result in an additional charge to the income tax expense and liability.

Stock-based compensation

Compensation expense for options granted to employees, directors and certain service providers is determined based on estimated fair values of the options at the time of grant using the Black-Scholes option pricing model, which takes into account, as of the grant date, the fair market value of the shares, expected volatility, expected life, expected forfeiture rate, expected dividend yield and the risk-free interest rate over the expected life of the option. The use of the Black-Scholes option pricing model requires input estimation of the expected life of the option, volatility, and forfeiture rate which can have a significant impact on the valuation model, and resulting expense recorded.

South32 Option Agreement

The option to form the JV LLC is recognized as a financial instrument at inception of the arrangement with an initial fair value of $nil. This option is required to be re-measured at fair value at each reporting date with any changes in fair value recorded in loss for the period.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our financial instruments consist of cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities. The fair value of the financial instruments approximates their carrying value due to the short-term nature of their maturity. Our financial instruments initially measured at fair value and then held at amortized cost include cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities.

(a) Currency risk

Currency risk is the risk of a fluctuation in financial asset and liability settlement amounts due to a change in foreign exchange rates. The Company operates in the United States and Canada. The Company’s exposure to currency risk at May 31, 2019 is limited to Canadian dollar amounts consisting of cash of CDN$244,000, accounts receivable of CDN$26,000 and accounts payable of CDN$442,000. Based on a 10% change in the US-Canadian exchange rate, assuming all other variables remain constant, the Company’s net loss would change by approximately $13,000.

22

(b) Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company holds cash and cash equivalents with Canadian Chartered financial institutions. The Company’s accounts receivable consists of Canadian Goods and Services Tax receivable from the Federal Government of Canada and other receivables for recoverable expenses. The Company’s exposure to credit risk is equal to the balance of cash and cash equivalents and accounts receivable as recorded in the financial statements.

(c) Liquidity risk

Liquidity risk is the risk that we will encounter difficulties raising funds to meet our financial obligations as they fall due. We are in the exploration stage and do not have cash inflows from operations; therefore, we manage liquidity risk through the management of the capital structure and financial leverage. Future financing may be obtained through debt financing, equity financing, sales of investments, convertible debt, exercise of options, or other means. Continued operations are dependent on our ability to obtain additional financing or to generate future cash flows. Our contractually obligated cash flow is disclosed under the section titled “Contractual Obligations.”

(d) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk with respect to interest earned on cash and cash equivalents. Based on balances as at May 31, 2019, a 1% change in interest rates would result in a change in net loss of $0.3 million, assuming all other variables remain constant.

As we are currently in the exploration phase none of our financial instruments are exposed to commodity price risk; however, our ability to obtain long-term financing and its economic viability could be affected by commodity price volatility.

Additional information

Additional information regarding the Company, including our annual report on Form 10-K, is available on SEDAR at www.sedar.com and EDGAR at www.sec.gov and on our website at www.trilogymetals.com. Information contained on our website is not incorporated by reference.

Item 4. Controls and Procedures

Management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of May 31, 2019. On the basis of this review, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have not been any changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated by the SEC under the Exchange Act) during the Company’s most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

23

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are a party to routine litigation and proceedings that are considered part of the ordinary course of its business. We are not aware of any material current, pending, or threatened litigation.

Item 1A. Risk Factors

Trilogy and its future business, operations and financial condition are subject to various risks and uncertainties due to the nature of its business and the present stage of exploration of its mineral properties. Certain of these risks and uncertainties are under the heading “Risk Factors” under Trilogy’s Form 10-K dated February 11, 2019, which is available on SEDAR www.sedar.com and EDGAR at www.sec.gov and on our website at www.trilogymetals.com.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

These disclosures are not applicable to us.

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibits

See Exhibit Index.

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 9, 2019	TRILOGY METALS INC.
	By:	/s/ Rick Van Nieuwenhuyse
		Rick Van Nieuwenhuyse
		President and Chief Executive Officer
	By:	/s/ Elaine M. Sanders
		Elaine M. Sanders
		Vice President and Chief Financial Officer

25

EXHIBIT INDEX

Exhibit No.	Description
3.1	Certificate of Incorporation, dated April 27, 2011 (incorporated by reference Exhibit 99.2 to the Registration Statement on Form 40-F as filed on March 1, 2012, File No. 001-35447)
3.2	Articles of Trilogy Metals Inc., effective April 27, 2011, as altered March 20, 2011 (incorporated by reference to Exhibit 99.3 to Amendment No. 1 to the Registration Statement on Form 40-F as filed on April 19, 2012, File No. 001-35447)

3.3 Notice of Articles and Certificate of Change of Name, dated September 1, 2016 (incorporated by reference to Exhibit 3.1 to the Form 8-K dated September 8, 2016)

31.1	Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)
31.2	Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101	Interactive Data Files
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

26

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Rick Van Nieuwenhuyse, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Trilogy Metals Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	July 9, 2019
By:	/s/ Rick Van Nieuwenhuyse
	Rick Van Nieuwenhuyse
	President and Chief Executive Officer
	(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Elaine Sanders, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Trilogy Metals Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	July 9, 2019
By:	/s/ Elaine Sanders
	Elaine Sanders
	Vice President and Chief Financial Officer
	(principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Trilogy Metals Inc. (the “Registrant”) for the period ended May 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Rick Van Nieuwenhuyse, President and Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 9, 2019
By:	/s/ Rick Van Nieuwenhuyse
	Rick Van Nieuwenhuyse
	President and Chief Executive Officer
	(principal executive officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Trilogy Metals Inc. (the “Registrant”) for the period ended May 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Elaine Sanders, Vice President and Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 9, 2019
By:	/s/ Elaine Sanders
	Elaine Sanders
	Vice President and Chief Financial Officer
	(principal financial officer)

XML

Document and Entity Information - shares	6 Months Ended
	May 31, 2019	Jul. 08, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Entity Interactive Data Current	Yes
Amendment Flag	false
Document Period End Date	May 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Registrant Name	Trilogy Metals Inc.
Entity Central Index Key	0001543418
Current Fiscal Year End Date	--11-30
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Filer Category	Accelerated Filer
Trading Symbol	TMQ
Security Exchange Name	NYSE
Entity Small Business	true
Entity Emerging Growth Company	false
Title of 12(b) Security	Common Shares
Entity Common Stock, Shares Outstanding		138,905,097

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	May 31, 2019	Nov. 30, 2018
Current assets
Cash and cash equivalents	$ 25,806	$ 22,991
Accounts receivable	171	23
Deposits and prepaid amounts	1,513	619
Total Current Assets	27,490	23,633
Rent deposit	114	114
Plant and equipment (note 3)	250	325
Mineral properties and development costs (note 4)	30,587	30,587
Total Assets	58,441	54,659
Current liabilities
Accounts payable and accrued liabilities (note 5)	1,481	1,657
Current liabilities	1,481	1,657
Mineral properties purchase option (note 4(c))	31,000	20,800
Total Liabilities	32,481	22,457
Shareholders' equity
Share capital (note 6) – unlimited common shares authorized, no par value Issued -132,143,407 (2018 – 131,585,612)	164,574	164,069
Warrants (note 6(c))	2,253	2,253
Contributed surplus	122	122
Contributed surplus – options (note 6(a))	20,936	19,076
Contributed surplus – units (note 6(b))	1,727	1,489
Deficit	(163,652)	(154,807)
Total Stockholders' Equity	25,960	32,202
Total Liabilities and Stockholders' Equity	$ 58,441	$ 54,659

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	6 Months Ended	12 Months Ended
	May 31, 2019	Nov. 30, 2018
Common Stock, Shares Authorized, Unlimited	Unlimited	Unlimited
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares, Issued	132,143,407	131,585,612

XML

Consolidated Statements of Loss and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	May 31, 2019	May 31, 2018	May 31, 2019	May 31, 2018
Expenses
Amortization	$ 38	$ 42	$ 75	$ 83
Foreign exchange loss (gain)	5	19	(29)	(44)
General and administrative	436	454	928	799
Investor relations	175	138	292	202
Mineral properties expense (note 4(d))	2,906	2,475	4,441	3,606
Professional fees	153	114	244	273
Salaries	282	223	563	452
Salaries – stock-based compensation	664	151	2,603	1,073
Total expenses	4,659	3,616	9,117	6,444
Other items
Loss on held for trading investments	0	125	0	260
Interest and other income	(150)	(77)	(272)	(94)
Loss and comprehensive loss for the period	$ 4,509	$ 3,664	$ 8,845	$ 6,610
Basic and diluted loss per common share	$ 0.04	$ 0.03	$ 0.07	$ 0.06
Weighted average number of common shares outstanding	132,095,920	117,583,238	132,007,414	111,989,192

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Share capital [Member]	Warrants [Member]	Contributed surplus [Member]	Contributed surplus - options [Member]	Contributed surplus - units [Member]	Deficit [Member]
Beginning Balance at Nov. 30, 2017	$ 25,665	$ 136,525	$ 2,163	$ 124	$ 18,402	$ 1,319	$ (132,868)
Beginning Balance (Shares) at Nov. 30, 2017		105,684,523
Exercise of options	0	$ 29	0	0	(29)	0	0
Exercise of options (Shares)		50,753
Restricted Share Units	0	$ 457	0	0	0	(457)	0
Restricted Share Units (Shares)		800,000
Stock-based compensation	922	$ 0	0	0	484	438	0
Loss for the period	(2,946)	0	0	0	0	0	(2,946)
Ending Balance at Feb. 28, 2018	23,641	$ 137,011	2,163	124	18,857	1,300	(135,814)
Ending Balance (Shares) at Feb. 28, 2018		106,535,276
Beginning Balance at Nov. 30, 2017	25,665	$ 136,525	2,163	124	18,402	1,319	(132,868)
Beginning Balance (Shares) at Nov. 30, 2017		105,684,523
Loss for the period	(6,610)
Ending Balance at May. 31, 2018	47,059	$ 163,947	2,253	124	18,942	1,361	(139,568)
Ending Balance (Shares) at May. 31, 2018		131,348,458
Beginning Balance at Nov. 30, 2017	25,665	$ 136,525	2,163	124	18,402	1,319	(132,868)
Beginning Balance (Shares) at Nov. 30, 2017		105,684,523
Bought-deal financing (note 8)		$ 28,750
Bought deal financing (Note 8) (Shares)		24,784,482
Share issuance costs		$ (1,805)
Ending Balance at Nov. 30, 2018	32,202	$ 164,069	2,253	122	19,076	1,489	(154,807)
Ending Balance (Shares) at Nov. 30, 2018		131,585,612
Beginning Balance at Feb. 28, 2018	23,641	$ 137,011	2,163	124	18,857	1,300	(135,814)
Beginning Balance (Shares) at Feb. 28, 2018		106,535,276
Bought-deal financing (note 8)	28,750	$ 28,750	90	0	0	0	(90)
Bought deal financing (Note 8) (Shares)		24,784,482
Share issuance costs	(1,819)	$ (1,819)	0	0	0	0	0
Exercise of options	0	$ 5	0	0	(5)	0	0
Exercise of options (Shares)		28,700
Stock-based compensation	151	$ 0	0	0	90	61	0
Loss for the period	(3,664)	0	0	0	0	0	(3,664)
Ending Balance at May. 31, 2018	47,059	$ 163,947	2,253	124	18,942	1,361	(139,568)
Ending Balance (Shares) at May. 31, 2018		131,348,458
Beginning Balance at Nov. 30, 2018	32,202	$ 164,069	2,253	122	19,076	1,489	(154,807)
Beginning Balance (Shares) at Nov. 30, 2018		131,585,612
Exercise of options	0	$ 28	0	0	(28)	0	0
Exercise of options (Shares)		44,230
Restricted Share Units	0	$ 424	0	0	0	(424)	0
Restricted Share Units (Shares)		412,501
Stock-based compensation	1,939	$ 0	0	0	1,586	353	0
Loss for the period	(4,336)	0	0	0	0	0	(4,336)
Ending Balance at Feb. 28, 2019	29,805	$ 164,521	2,253	122	20,634	1,418	(159,143)
Ending Balance (Shares) at Feb. 28, 2019		132,042,343
Beginning Balance at Nov. 30, 2018	32,202	$ 164,069	2,253	122	19,076	1,489	(154,807)
Beginning Balance (Shares) at Nov. 30, 2018		131,585,612
Loss for the period	(8,845)
Ending Balance at May. 31, 2019	25,960	$ 164,574	2,253	122	20,936	1,727	(163,652)
Ending Balance (Shares) at May. 31, 2019		132,143,407
Beginning Balance at Feb. 28, 2019	29,805	$ 164,521	2,253	122	20,634	1,418	(159,143)
Beginning Balance (Shares) at Feb. 28, 2019		132,042,343
Exercise of options	0	$ 53	0	0	(53)	0	0
Exercise of options (Shares)		101,064
Stock-based compensation	664	$ 0	0	0	355	309	0
Loss for the period	(4,509)	0	0	0	0	0	(4,509)
Ending Balance at May. 31, 2019	$ 25,960	$ 164,574	$ 2,253	$ 122	$ 20,936	$ 1,727	$ (163,652)
Ending Balance (Shares) at May. 31, 2019		132,143,407

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	May 31, 2019	May 31, 2018
Cash flows used in operating activities
Loss for the period	$ (8,845)	$ (6,610)
Items not affecting cash
Amortization	75	83
Loss on held for trading investments	0	260
Unrealized foreign exchange loss (gain)	8	(64)
Stock-based compensation	2,603	1,073
Net change in non-cash working capital
Decrease (Increase) in accounts receivable	(148)	441
Increase in deposits and prepaid amounts	(894)	(67)
Decrease in accounts payable and accrued liabilities	(176)	(1,682)
Net Cash Provided by (Used in) Operating Activities	(7,377)	(6,566)
Cash flows from (used in) financing activities
Proceeds from bought deal financing	0	28,750
Share issuance cost	0	(1,819)
Net Cash Provided by (Used in) Financing Activities	0	26,931
Cash flows from investing activities
Acquisition of plant & equipment	0	(13)
Mineral properties funding (note 4 (c))	10,200	9,635
Proceeds from the sale of investments, net of fees	0	2,080
Net Cash Provided by (Used in) Investing Activities	10,200	11,702
Increase in cash and cash equivalents	2,823	32,067
Effect of exchange rate on cash and cash equivalents	(8)	11
Cash and cash equivalents – beginning of period	22,991	5,391
Cash and cash equivalents – end of period	$ 25,806	$ 37,469

XML

Nature of operations

6 Months Ended

May 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of operations [Text Block]

1 Nature of operations

Trilogy Metals Inc. (“Trilogy” or the “Company”) was incorporated in British Columbia under the Business Corporations Act (BC) on April 27, 2011. The Company is engaged in the exploration and development of mineral properties with a focus on the Upper Kobuk Mineral Projects (“UKMP”), including the Arctic and Bornite Projects located in Northwest Alaska in the United States of America (“US”).

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Summary of significant accounting policies

6 Months Ended

May 31, 2019

Accounting Policies [Abstract]

Summary of significant accounting policies [Text Block]

2 Summary of significant accounting policies

Basis of presentation

These consolidated financial statements have been prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of Trilogy and its wholly-owned subsidiary, NovaCopper US Inc. (dba “Trilogy Metals US”). All significant intercompany transactions are eliminated on consolidation.

All figures are in United States dollars unless otherwise noted. References to CAD$ refer to amounts in Canadian dollars.

These unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s financial position as of May 31, 2019 and our results of operations and cash flows for the six months ended May 31, 2019 and May 31, 2018. The results of operations for the six months ended May 31, 2019 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2019.

As these interim consolidated financial statements do not contain all of the disclosures required by U.S. GAAP for annual financial statements, these unaudited interim consolidated financial statements should be read in conjunction with the annual financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2018 filed with the U.S. Securities and Exchange Commission (“SEC”) on February 11, 2019.

These financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on July 8, 2019.

Accounting standards adopted

i. Financial instruments

In March 2016, the FASB issued new guidance on classifying and measuring financial instruments (“ASU 2016-01”). This update is effective for annual reporting periods beginning after December 15, 2017. The Company adopted the provisions of this guidance effective November 1, 2018. As the Company’s investments in equity instruments were previously classified at fair value with the change in fair value recorded to the statement of loss and comprehensive loss, the new guidance does not impact the Company’s accounting or reporting results.

Recent accounting pronouncements

ii. Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting requirements for accounting for, presentation of, and classification of leases (“ASU 2016-02”). This will result in most leases being capitalized as a right of use asset with a related liability on the balance sheets. The requirements of the new standard are effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, which for Trilogy is the first quarter of the fiscal year ending November 30, 2020. We expect the adoption will have an impact as we expect to capitalize leases, specifically our office leases which are not currently recognized on the balance sheets. We are in the process of analyzing the quantitative impact of this guidance on our results of operations and financial position. The impact of this adoption will increase asset and liability balances as part of recognizing the leases on the balance sheet.

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Plant and equipment

6 Months Ended

May 31, 2019

Property, Plant and Equipment [Abstract]

Plant and equipment [Text Block]

3 Plant and equipment

in thousands of dollars

	May 31, 2019
	Cost $		Accumulated amortization $			Net $
British Columbia, Canada
Furniture and equipment		63		(23	)		40
Leasehold improvements		53		(14	)		39
Computer hardware and software		115		(111	)		4
Alaska, USA
Machinery, and equipment		3,178		(3,014	)		164
Vehicles		348		(346	)		2
Computer hardware and software		35		(34	)		1
		3,792		(3,542	)		250

in thousands of dollars

	November 30, 2018
	Cost $		Accumulated amortization $			Net $
British Columbia, Canada
Furniture and equipment		63		(17	)		46
Leasehold improvements		53		(10	)		43
Computer hardware and software		115		(109	)		6
Alaska, USA
Machinery, and equipment		3,178		(2,964	)		214
Vehicles		348		(333	)		15
Computer hardware and software		35		(34	)		1
		3,792		(3,467	)		325

XML

Mineral properties and development costs

6 Months Ended

May 31, 2019

Mineral Industries Disclosures [Abstract]

Mineral Industries Disclosures [Text Block]

4 Mineral properties and development costs

in thousands of dollars

	November 30, 2018 $		Acquisition costs $		May 31, 2019 $
Alaska, USA
Ambler (a)		26,587		-		26,587
Bornite (b)		4,000		-		4,000
		30,587		-		30,587

in thousands of dollars

	November 30, 2017 $		Acquisition costs $		November 30, 2018 $
Alaska, USA
Ambler (a)		26,587		-		26,587
Bornite (b)		4,000		-		4,000
		30,587		-		30,587

(a) Ambler

On January 11, 2010, NovaGold Resources Inc. (“NovaGold”), through Alaska Gold Company (“AGC”), at the time a wholly-owned NovaGold subsidiary, purchased 100% of the Ambler lands in Northwest Alaska, which contains the copper-zinc-lead-gold-silver Arctic Project and other mineralized targets within the volcanogenic massive sulfide belt, through a series of cash and share payments. Total fair value of the consideration was $26.6 million. The vendor retained a 1% net smelter return royalty that the Company can purchase at any time for a one-time payment of $10.0 million.

The Ambler lands were acquired on October 17, 2011 by Trilogy Metals US through a purchase and sale agreement with AGC. On October 24, 2011, NovaGold transferred its ownership of Trilogy Metals US to the Company, then itself a wholly owned subsidiary of NovaGold, which was subsequently spun-out to NovaGold shareholders and publicly listed on April 30, 2012 (“NovaGold Arrangement”).

(b) Bornite

On October 19, 2011, Trilogy Metals US acquired the exclusive right to explore and the non-exclusive right to access and enter on the Bornite lands, and lands deeded to NANA Regional Corporation, Inc. (“NANA”) through the Alaska Native Claims Settlement Act, located adjacent to the Ambler lands in Northwest Alaska. As consideration, Trilogy Metals US paid $4 million to acquire the right to explore and develop the combined Upper Kobuk Mineral Projects through an Exploration Agreement and Option to Lease with NANA. Upon a decision to proceed with construction of a mine on the lands, NANA maintains the right to purchase between a 16%-25% ownership interest in the mine or retain a 15% net proceeds royalty which is payable after Trilogy Metals US has recovered certain historical costs, including capital and cost of capital. Should NANA elect to purchase an ownership interest, consideration will be payable equal to all historical costs incurred on the properties at the elected percentage purchased less $40 million, not to be less than zero. The parties would form a joint venture and be responsible for all future costs, including capital costs of the mine based on their pro-rata share.

NANA would also be granted a net smelter return royalty of between 1% and 2.5% upon the execution of a mining lease or a surface use agreement, the amount of which is determined by the classification of land from which production originates.

(c) Option Agreement

On April 10, 2017, Trilogy and Trilogy Metals US entered into an Option Agreement to form a Joint Venture with South32 Group Operations Pty Ltd., a wholly-owned subsidiary of South32 Limited, which agreement was later assigned by South32 Operations to its affiliate, South32 USA Exploration Inc. (“South32”) on the UKMP (“Option Agreement”). Under the terms of the Option Agreement, as amended, Trilogy Metals US granted South32 the right to form a 50/50 joint venture to hold all of Trilogy Metals US’ Alaskan assets. Upon exercise of the option, Trilogy Metals US will transfer its Alaskan assets, including the UKMP, and South32 will contribute a minimum of $150 million, to a newly formed and jointly held, limited liability company (“LLC”).

To maintain the option in good standing, South32 is required to fund a minimum of $10 million per year for up to a three-year period, which funds will be used to execute a mutually agreed upon program at the UKMP. The funds provided by South32 may only be expended in accordance with an approved program by a technical committee with equal representation from Trilogy and South32. South32 may exercise its option at any time over the three-year period to enter into the 50/50 joint venture. To subscribe for 50% of the JV, South32 must contribute a minimum of $150 million, plus (i) any amounts Trilogy spends on matched parallel funding to a maximum of $16 million over the three year period and (ii) $5 million if the option had been exercised between April 1, 2018 and March 31, 2019 or $10 million if the option is exercised between April 1, 2019 and the expiration date of the option, less the amount of the initial funding contributed by South32 (the “Subscription Price”). South32 has now funded the full three-year option period. South32 has until the end of January 2020 to exercise the option to form the JV LLC and make the subscription payment. Should South32 not make its annual minimum payment or elect to withdraw, the option will lapse and South32 will have no claim to ownership or the funds it had already spent

During the year ended November 30, 2017, the Company received the first payment of $10.0 million and these funds were expended on the year 1 program at the Bornite Project. In October 2017, the Company received $0.4 million as a first instalment towards the year 2 program and budget to begin preparatory work. During the year ended November 30, 2018, the Company received payments totaling $10.4 million following the approval of the year 2 program and budget in January 2018, including a $0.80 million advance on South32’s year three funding obligation per the Option Agreement. During the quarter ended February 28, 2019, the Company received payments totaling $10.2 million following the approval of the year 3 program and budget, including $1 million funding for the approved regional exploration program. The receipt of the year 3 funding represents receipt of the final tranche of funding from South32. The Company is responsible for the disbursement of these funds in accordance with the approved program and budget and accordingly has not classified the funds as restricted cash.

As the initial option payments are credited against the future subscription price upon exercise, the Company has accounted for the payments received from South32 as deferred consideration for the purchase of the UKMP interest. At such time as the option is exercised, the $31.0 million of payments received will be recognized as part of the consideration received for the Company’s contribution of the UKMP into JV LLC. If South32 withdraws from the Option Agreement, the consideration will be recognized as income in the statement of loss at that time.

The option to form the JV LLC is recognized as a financial instrument at inception of the arrangement with an initial fair value of $nil. This option is required to be re-measured at fair value at each reporting date with any changes in fair value recorded in loss for the period. The Company determined that the fair value of the option remains $nil as at May 31, 2019.

(d) Mineral properties expense

The following table summarizes mineral properties expense for the noted periods.

In thousands of dollars

	Three months ended May 31, 2019 $		Three months ended May 31, 2018  $			Six months ended May 31, 2019  $			Six months ended May 31, 2018  $
Alaska, USA
Community		146		154			264			244
Drilling		173		180			173			180
Engineering		303		186			624			505
Environmental		136		81			271			169
Geochemistry and geophysics		593		591			758			646
Land and permitting		174		166			360			359
Project support		778		601			1,004			677
Other income		-		(2	)		(1	)		(20	)
Wages and benefits		603		518			988			846
Mineral property expense		2,906		2,475			4,441			3,606

Mineral property expenses consist of direct drilling, personnel, community, resource reporting and other exploration expenses as outlined above, as well as indirect project support expenses such as fixed wing charters, helicopter support, fuel, and other camp operation costs. Cumulative mineral properties expense in Alaska from the initial earn-in agreement on the property in 2004 to May 31, 2019 is $99.0 million and cumulative acquisition costs are $30.6 million totaling $129.6 million spent to date.

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Accounts payable and accrued liabilities

6 Months Ended

May 31, 2019

Accounts Payable and Accrued Liabilities [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

5 Accounts payable and accrued liabilities

in thousands of dollars

	May 31, 2019 $		November 30, 2018 $
Trade accounts payable		834		400
Accrued liabilities		474		503
Accrued salaries and vacation		173		746
Due to related parties		-		8
Accounts payable and accrued liabilities		1,481		1,657

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Share capital

6 Months Ended

May 31, 2019

Equity [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

6 Share capital

Authorized:

unlimited common shares, no par value

In thousands of dollars, except share amounts

	Number of shares		Ascribed value $
November 30, 2017		105,684,523		136,525
Bought deal financing		24,784,482		28,750
Share issuance costs		-		(1,805	)
Exercise of options		315,148		140
Restricted share units		800,000		457
NovaGold DSU conversion		1,459		2
November 30, 2018		131,585,612		164,069
Exercise of options		145,294		81
Restricted share units		412,501		424
May 31, 2019, issued and outstanding		132,143,407		164,574

On April 30, 2012, under the NovaGold Arrangement, Trilogy committed to issue common shares to satisfy holders of NovaGold deferred share units (“NovaGold DSUs”) on record as of the close of business April 27, 2012. When vested, Trilogy committed to deliver one Common Share to the holder for every six shares of NovaGold the holder is entitled to receive, rounded down to the nearest whole number. As of May 31, 2019, there remains 11,927 NovaGold DSUs outstanding representing a right to receive 1,988 Common Shares in Trilogy, which will settle upon certain directors retiring from NovaGold’s board.

On April 20, 2018, the Company completed a bought-deal financing for gross proceeds of $28.7 million by issuing 24,784,482 common shares at $1.16 per common share. Expenses including bank commissions, legal fees, stock exchange and other fees totaled $1.8 million for net proceeds of $26.9 million.

(a) Stock options

During the period ended May 31, 2019, the Company granted 2,527,500 options (2018 – 2,125,000 options) at a weighted-average exercise price of CAD$2.96 (2018 – CAD$1.04) to employees, consultants and directors exercisable for a period of five years with various vesting terms from immediate vesting to over a two-year period. The weighted-average fair value attributable to options granted in the period was $1.08 (2018 - $0.37).

For the period ended May 31, 2019, Trilogy recognized a stock-based compensation charge of $1.94 million (2018– $0.58 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

The recognized fair value of the stock options granted in the period has been estimated using the Black-Scholes option pricing model.

Assumptions used in the pricing model for the period are as provided below.

	May 31, 2019
Risk-free interest rates		2.03	%
Exercise price		CAD$3.01
Expected life		3.0 years
Expected volatility		75.0	%
Expected dividends		Nil

As of May 31, 2019, there were 1,841,672 non-vested options outstanding with a weighted average exercise price of $1.79; the non-vested stock option expense not yet recognized was $0.90 million. This expense is expected to be recognized over the next two years.

A summary of the Company’s stock option plan and changes during the period ended May 31, 2019 is as follows:

	May 31, 2019
	Number of options			Weighted average exercise price $
Balance – beginning of the period		8,821,434			0.60
Granted		2,527,500			2.19
Exercised		(219,153	)		0.77
Balance – end of period		11,129,781			0.95

The following table summarizes information about the stock options outstanding at May 31, 2019.

	Outstanding						Exercisable				Unvested
Range of price	Number of outstanding options		Weighted average years to expiry		Weighted average exercise price $		Number of exercisable options		Weighted average exercise price $		Number of unvested options
$0.33 to $0.50		3,920,614		1.22		0.38		3,920,614		0.38		-
$0.51 to $1.00		4,346,667		2.45		0.71		3,898,331		0.70		448,336
$1.01 to $1.50		225,000		3.87		1.31		125,000		1.22		100,000
$1.51 to $2.00		120,000		4.11		1.79		86,666		1.76		33,334
$2.01 to $2.52		2,517,500		4.53		2.19		1,257,498		2.19		1,260,002
		11,129,781		2.53		0.95		9,288,109		0.79		1,841,672

The aggregate intrinsic value of vested share options (the market value less the exercise price) at May 31, 2019 was $17.6 million (2018 - $5.9 million) and the aggregate intrinsic value of exercised options for the six months ended May 31, 2019 was $0.3 million (2018 - $0.1 million).

(b) Restricted Share Units and Deferred Share Units

The Company has a Restricted Share Unit Plan (“RSU Plan”) and a Non-Executive Director Deferred Share Unit Plan (“DSU Plan”) to provide long-term incentives to employees, officers and directors. Awards under the RSU Plan and DSU Plan may be settled in cash and/or common shares of the Company at the Company’s election with each restricted share unit (“RSU”) and deferred share unit (“DSU”) entitling the holder to receive one common share of the Company or equivalent value. All units are accounted for as equity-settled awards.

A summary of the Company’s unit plans and changes during the period ended May 31, 2019 is as follows:

	Number of RSUs			Number of DSUs
Balance – beginning of the period		400,002			1,182,106
Granted		225,000			104,489
Vested/paid		(412,501	)		-
Balance – end of period		212,501			1,286,595

For the period ended May 31, 2019, Trilogy recognized a stock-based compensation charge of $0.66 million (2018- $0.49 million), net of estimated forfeitures.

As part of the annual incentive payout for the 2018 fiscal year, 225,000 RSUs were granted to officers, vesting half on the grant date and half on the first anniversary of the grant date. RSUs vesting in December 2018 were settled on December 21, 2018 through the issuance of 412,501 common shares.

(c) Share Purchase Warrants

A summary of the Company’s warrants and changes during the period ended May 31, 2019 is as follows:

	Number of warrants		Years to expiry		Exercise price $
Balance – beginning of the period		6,521,740		0.59		1.52
Balance – end of period		6,521,740		0.09		1.52

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Financial instruments

6 Months Ended

May 31, 2019

Financial Instruments [Abstract]

Financial instruments [Text Block]

7 Financial instruments

The Company is exposed to a variety of risks arising from financial instruments. These risks and management’s objectives, policies and procedures for managing these risks are disclosed as follows.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities. The fair value of the Company’s financial instruments approximates their carrying value due to the short-term nature of their maturity. The Company’s financial instruments initially measured at fair value and then held at amortized cost include cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities. The Company’s investments were held for trading and were marked-to-market at each period end with changes in fair value recorded to the statement of loss.

Financial risk management

The Company’s activities expose it to certain financial risks, including currency risk, credit risk, liquidity risk, interest risk and price risk.

(a) Currency risk

Currency risk is the risk of a fluctuation in financial asset and liability settlement amounts due to a change in foreign exchange rates. The Company operates in the United States and Canada. The Company’s exposure to currency risk at May 31, 2019 is limited to Canadian dollar consisting of cash of CDN$244,000, accounts receivable of CDN$26,000 and accounts payable of CDN$442,000. Based on a 10% change in the US-Canadian exchange rate, assuming all other variables remain constant, the Company’s net loss would change by approximately $13,000.

(b) Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company holds cash and cash equivalents with Canadian Chartered financial institutions. The Company’s accounts receivable consists of Canadian Goods and Services Tax receivable from the Federal Government of Canada and other receivables for recoverable expenses. The Company’s exposure to credit risk is equal to the balance of cash and cash equivalents and accounts receivable as recorded in the financial statements.

(c) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulties raising funds to meet its financial obligations as they fall due. The Company is in the exploration stage and does not have cash inflows from operations; therefore, the Company manages liquidity risk through the management of its capital structure and financial leverage.

Contractually obligated cash flow requirements as at May 31, 2019 are as follows:

in thousands of dollars

	Total $		< 1 Year $		1–2 Years $		2–5 Years $		Thereafter $
Accounts payable and accrued liabilities		1,481		1,481		-		-		-
		1,481		1,481		-		-		-

(d) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk with respect to interest earned on cash and cash equivalents. Based on balances as at May 31, 2019, a 1% change in interest rates would result in a change in net loss of $0.3 million, assuming all other variables remain constant.

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Commitment

6 Months Ended

May 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitment [Text Block]

8 Commitment

The Company has commitments with respect to office and warehouse leases requiring future minimum lease payments as follows:

in thousands of dollars

	May 31, 2019 $
One year		231
Years 2 through 5		457
Beyond 5 years		414
Total		1,102

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Subsequent events

6 Months Ended

May 31, 2019

Subsequent Events [Abstract]

Subsequent Events [Text Block]

9 Subsequent events

On June 28, 2019, the Company announced all its outstanding warrants were exercised in advance of the July 2, 2019 expiry date.  As a result of the warrants exercised, the Company issued a total of 6,521,740 common shares and received cash proceeds of approximately $9.9 million.

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

May 31, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of presentation

These consolidated financial statements have been prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of Trilogy and its wholly-owned subsidiary, NovaCopper US Inc. (dba “Trilogy Metals US”). All significant intercompany transactions are eliminated on consolidation.

All figures are in United States dollars unless otherwise noted. References to CAD$ refer to amounts in Canadian dollars.

These unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s financial position as of May 31, 2019 and our results of operations and cash flows for the six months ended May 31, 2019 and May 31, 2018. The results of operations for the six months ended May 31, 2019 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2019.

As these interim consolidated financial statements do not contain all of the disclosures required by U.S. GAAP for annual financial statements, these unaudited interim consolidated financial statements should be read in conjunction with the annual financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2018 filed with the U.S. Securities and Exchange Commission (“SEC”) on February 11, 2019.

These financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on July 8, 2019.

Accounting standards adopted [Policy Text Block]

Accounting standards adopted

i. Financial instruments

In March 2016, the FASB issued new guidance on classifying and measuring financial instruments (“ASU 2016-01”). This update is effective for annual reporting periods beginning after December 15, 2017. The Company adopted the provisions of this guidance effective November 1, 2018. As the Company’s investments in equity instruments were previously classified at fair value with the change in fair value recorded to the statement of loss and comprehensive loss, the new guidance does not impact the Company’s accounting or reporting results.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent accounting pronouncements

ii. Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting requirements for accounting for, presentation of, and classification of leases (“ASU 2016-02”). This will result in most leases being capitalized as a right of use asset with a related liability on the balance sheets. The requirements of the new standard are effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, which for Trilogy is the first quarter of the fiscal year ending November 30, 2020. We expect the adoption will have an impact as we expect to capitalize leases, specifically our office leases which are not currently recognized on the balance sheets. We are in the process of analyzing the quantitative impact of this guidance on our results of operations and financial position. The impact of this adoption will increase asset and liability balances as part of recognizing the leases on the balance sheet.

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Plant and equipment (Tables)

6 Months Ended

May 31, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

in thousands of dollars

	May 31, 2019
	Cost $		Accumulated amortization $			Net $
British Columbia, Canada
Furniture and equipment		63		(23	)		40
Leasehold improvements		53		(14	)		39
Computer hardware and software		115		(111	)		4
Alaska, USA
Machinery, and equipment		3,178		(3,014	)		164
Vehicles		348		(346	)		2
Computer hardware and software		35		(34	)		1
		3,792		(3,542	)		250

in thousands of dollars

	November 30, 2018
	Cost $		Accumulated amortization $			Net $
British Columbia, Canada
Furniture and equipment		63		(17	)		46
Leasehold improvements		53		(10	)		43
Computer hardware and software		115		(109	)		6
Alaska, USA
Machinery, and equipment		3,178		(2,964	)		214
Vehicles		348		(333	)		15
Computer hardware and software		35		(34	)		1
		3,792		(3,467	)		325

XML

Mineral properties and development costs (Tables)

6 Months Ended

May 31, 2019

Mineral Industries Disclosures [Abstract]

Schedule of Mineral Properties and Development Costs [Table Text Block]

in thousands of dollars

	November 30, 2018 $		Acquisition costs $		May 31, 2019 $
Alaska, USA
Ambler (a)		26,587		-		26,587
Bornite (b)		4,000		-		4,000
		30,587		-		30,587

in thousands of dollars

	November 30, 2017 $		Acquisition costs $		November 30, 2018 $
Alaska, USA
Ambler (a)		26,587		-		26,587
Bornite (b)		4,000		-		4,000
		30,587		-		30,587

(a) Ambler

On January 11, 2010, NovaGold Resources Inc. (“NovaGold”), through Alaska Gold Company (“AGC”), at the time a wholly-owned NovaGold subsidiary, purchased 100% of the Ambler lands in Northwest Alaska, which contains the copper-zinc-lead-gold-silver Arctic Project and other mineralized targets within the volcanogenic massive sulfide belt, through a series of cash and share payments. Total fair value of the consideration was $26.6 million. The vendor retained a 1% net smelter return royalty that the Company can purchase at any time for a one-time payment of $10.0 million.

The Ambler lands were acquired on October 17, 2011 by Trilogy Metals US through a purchase and sale agreement with AGC. On October 24, 2011, NovaGold transferred its ownership of Trilogy Metals US to the Company, then itself a wholly owned subsidiary of NovaGold, which was subsequently spun-out to NovaGold shareholders and publicly listed on April 30, 2012 (“NovaGold Arrangement”).

(b) Bornite

On October 19, 2011, Trilogy Metals US acquired the exclusive right to explore and the non-exclusive right to access and enter on the Bornite lands, and lands deeded to NANA Regional Corporation, Inc. (“NANA”) through the Alaska Native Claims Settlement Act, located adjacent to the Ambler lands in Northwest Alaska. As consideration, Trilogy Metals US paid $4 million to acquire the right to explore and develop the combined Upper Kobuk Mineral Projects through an Exploration Agreement and Option to Lease with NANA. Upon a decision to proceed with construction of a mine on the lands, NANA maintains the right to purchase between a 16%-25% ownership interest in the mine or retain a 15% net proceeds royalty which is payable after Trilogy Metals US has recovered certain historical costs, including capital and cost of capital. Should NANA elect to purchase an ownership interest, consideration will be payable equal to all historical costs incurred on the properties at the elected percentage purchased less $40 million, not to be less than zero. The parties would form a joint venture and be responsible for all future costs, including capital costs of the mine based on their pro-rata share.

NANA would also be granted a net smelter return royalty of between 1% and 2.5% upon the execution of a mining lease or a surface use agreement, the amount of which is determined by the classification of land from which production originates.

Schedule of Mineral Property Expenses [Table Text Block]

The following table summarizes mineral properties expense for the noted periods.

In thousands of dollars

	Three months ended May 31, 2019 $		Three months ended May 31, 2018  $			Six months ended May 31, 2019  $			Six months ended May 31, 2018  $
Alaska, USA
Community		146		154			264			244
Drilling		173		180			173			180
Engineering		303		186			624			505
Environmental		136		81			271			169
Geochemistry and geophysics		593		591			758			646
Land and permitting		174		166			360			359
Project support		778		601			1,004			677
Other income		-		(2	)		(1	)		(20	)
Wages and benefits		603		518			988			846
Mineral property expense		2,906		2,475			4,441			3,606

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Accounts payable and accrued liabilities (Tables)

6 Months Ended

May 31, 2019

Accounts Payable and Accrued Liabilities [Abstract]

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

in thousands of dollars

	May 31, 2019 $		November 30, 2018 $
Trade accounts payable		834		400
Accrued liabilities		474		503
Accrued salaries and vacation		173		746
Due to related parties		-		8
Accounts payable and accrued liabilities		1,481		1,657

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Share capital (Tables)

6 Months Ended

May 31, 2019

Equity [Abstract]

Schedule of Common Stock Outstanding Roll Forward [Table Text Block]

Authorized:

unlimited common shares, no par value

In thousands of dollars, except share amounts

	Number of shares		Ascribed value $
November 30, 2017		105,684,523		136,525
Bought deal financing		24,784,482		28,750
Share issuance costs		-		(1,805	)
Exercise of options		315,148		140
Restricted share units		800,000		457
NovaGold DSU conversion		1,459		2
November 30, 2018		131,585,612		164,069
Exercise of options		145,294		81
Restricted share units		412,501		424
May 31, 2019, issued and outstanding		132,143,407		164,574

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

Assumptions used in the pricing model for the period are as provided below.

	May 31, 2019
Risk-free interest rates		2.03	%
Exercise price		CAD$3.01
Expected life		3.0 years
Expected volatility		75.0	%
Expected dividends		Nil

Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of the Company’s stock option plan and changes during the period ended May 31, 2019 is as follows:

	May 31, 2019
	Number of options			Weighted average exercise price $
Balance – beginning of the period		8,821,434			0.60
Granted		2,527,500			2.19
Exercised		(219,153	)		0.77
Balance – end of period		11,129,781			0.95

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

The following table summarizes information about the stock options outstanding at May 31, 2019.

	Outstanding						Exercisable				Unvested
Range of price	Number of outstanding options		Weighted average years to expiry		Weighted average exercise price $		Number of exercisable options		Weighted average exercise price $		Number of unvested options
$0.33 to $0.50		3,920,614		1.22		0.38		3,920,614		0.38		-
$0.51 to $1.00		4,346,667		2.45		0.71		3,898,331		0.70		448,336
$1.01 to $1.50		225,000		3.87		1.31		125,000		1.22		100,000
$1.51 to $2.00		120,000		4.11		1.79		86,666		1.76		33,334
$2.01 to $2.52		2,517,500		4.53		2.19		1,257,498		2.19		1,260,002
		11,129,781		2.53		0.95		9,288,109		0.79		1,841,672

Schedule Of Restricted Share Units and Deferred Share Units plans [Table Text Block]

A summary of the Company’s unit plans and changes during the period ended May 31, 2019 is as follows:

	Number of RSUs			Number of DSUs
Balance – beginning of the period		400,002			1,182,106
Granted		225,000			104,489
Vested/paid		(412,501	)		-
Balance – end of period		212,501			1,286,595

Schedule of Warrants, Activity [Table Text Block]

A summary of the Company’s warrants and changes during the period ended May 31, 2019 is as follows:

	Number of warrants		Years to expiry		Exercise price $
Balance – beginning of the period		6,521,740		0.59		1.52
Balance – end of period		6,521,740		0.09		1.52

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Financial instruments (Tables)

6 Months Ended

May 31, 2019

Financial Instruments [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block]

Contractually obligated cash flow requirements as at May 31, 2019 are as follows:

in thousands of dollars

	Total $		< 1 Year $		1–2 Years $		2–5 Years $		Thereafter $
Accounts payable and accrued liabilities		1,481		1,481		-		-		-
		1,481		1,481		-		-		-

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Commitment (Tables)

6 Months Ended

May 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments [Table Text Block]

The Company has commitments with respect to office and warehouse leases requiring future minimum lease payments as follows:

in thousands of dollars

	May 31, 2019 $
One year		231
Years 2 through 5		457
Beyond 5 years		414
Total		1,102

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Plant and equipment (Details) - USD ($) $ in Thousands	May 31, 2019	Nov. 30, 2018
Cost	$ 3,792	$ 3,792
Accumulated amortization	(3,542)	(3,467)
Net	250	325
Furniture and equipment [Member] | British Columbia, Canada [Member]
Cost	63	63
Accumulated amortization	(23)	(17)
Net	40	46
Leasehold improvements [Member] | British Columbia, Canada [Member]
Cost	53	53
Accumulated amortization	(14)	(10)
Net	39	43
Machinery, and equipment[Member] | Alaska, USA [Member]
Cost	3,178	3,178
Accumulated amortization	(3,014)	(2,964)
Net	164	214
Vehicles [Member] | Alaska, USA [Member]
Cost	348	348
Accumulated amortization	(346)	(333)
Net	2	15
Computer hardware and software [Member] | British Columbia, Canada [Member]
Cost	115	115
Accumulated amortization	(111)	(109)
Net	4	6
Computer hardware and software [Member] | Alaska, USA [Member]
Cost	35	35
Accumulated amortization	(34)	(34)
Net	$ 1	$ 1

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Mineral properties and development costs (Narrative) (Details) - USD ($) $ in Thousands				1 Months Ended	3 Months Ended			6 Months Ended		12 Months Ended		185 Months Ended
	Apr. 10, 2017	Oct. 19, 2011	Jan. 11, 2010	Oct. 31, 2017	May 31, 2019	Feb. 28, 2019	May 31, 2018	May 31, 2019	May 31, 2018	Nov. 30, 2018	Nov. 30, 2017	May 31, 2019
Payments for mineral property						$ 31,000
Mineral properties expense					$ 2,906		$ 2,475	$ 4,441	$ 3,606
Maximum Subscription Price	$ 150,000
Cost, Maintenance	$ 10,000
Proceeds from Contributions from Affiliates								$ 10,200	$ 9,635
Subscription of Options Description	To subscribe for 50% of the JV, South32 must contribute a minimum of $150 million, plus (i) any amounts Trilogy spends on matched parallel funding to a maximum of $16 million over the three year period and (ii) $5 million if the option is exercised between April 1, 2018 and March 31, 2019 or $10 million if the option is exercised between April 1, 2019 and the expiration date of the option, less the amount of the initial funding contributed by South32 (the “Subscription Price”).
Approximations
Payments for mineral property												$ 129,600
Acquisition costs												30,600
Mineral properties expense												$ 99,000
Titiribi Property [Member]
Proceeds from Contributions from Affiliates				$ 400		10,200				$ 10,400	$ 10,000
Proceeds From Advances from Affiliates										$ 800
Regional Exploration Program Budget Funding						$ 1,000
Bornite Property [Member]
Payments for mineral property		$ 4,000
Net proceeds royalty		15.00%
Discount on consideration		$ 40,000
Bornite Property [Member] | Minimum [Member]
Mineral property interest percentage		16.00%
Net smelter return royalty		1.00%
Bornite Property [Member] | Maximum [Member]
Mineral property interest percentage		25.00%
Net smelter return royalty		2.50%
Ambler Property [Member]
Mineral property interest percentage			100.00%
Payments for mineral property			$ 10,000
Mineral property, fair value of consideration			$ 26,600
Net smelter return royalty			1.00%

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Schedule of Mineral Properties and Development Costs (Details) - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
		May 31, 2019	Nov. 30, 2018	Nov. 30, 2017
Mineral properties and development costs		$ 30,587	$ 30,587
Alaska, USA [Member]
Acquisition costs		0	0
Mineral properties and development costs		30,587	30,587	$ 30,587
Ambler Propertyss [Member] | Alaska, USA [Member]
Acquisition costs	[1]	0	0
Mineral properties and development costs	[1]	26,587	26,587	26,587
Bornite Propertys [Member] | Alaska, USA [Member]
Acquisition costs	[2]	0	0
Mineral properties and development costs	[2]	$ 4,000	$ 4,000	$ 4,000

[1] On January 11, 2010, NovaGold Resources Inc. (“NovaGold”), through Alaska Gold Company (“AGC”), at the time a wholly-owned NovaGold subsidiary, purchased 100% of the Ambler lands in Northwest Alaska, which contains the copper-zinc-lead-gold-silver Arctic Project and other mineralized targets within the volcanogenic massive sulfide belt, through a series of cash and share payments. Total fair value of the consideration was $26.6 million. The vendor retained a 1% net smelter return royalty that the Company can purchase at any time for a one-time payment of $10.0 million. The Ambler lands were acquired on October 17, 2011 by Trilogy Metals US through a purchase and sale agreement with AGC. On October 24, 2011, NovaGold transferred its ownership of Trilogy Metals US to the Company, then itself a wholly owned subsidiary of NovaGold, which was subsequently spun-out to NovaGold shareholders and publicly listed on April 30, 2012 (“NovaGold Arrangement”).

[2] On October 19, 2011, Trilogy Metals US acquired the exclusive right to explore and the non-exclusive right to access and enter on the Bornite lands, and lands deeded to NANA Regional Corporation, Inc. (“NANA”) through the Alaska Native Claims Settlement Act, located adjacent to the Ambler lands in Northwest Alaska. As consideration, Trilogy Metals US paid $4 million to acquire the right to explore and develop the combined Upper Kobuk Mineral Projects through an Exploration Agreement and Option to Lease with NANA. Upon a decision to proceed with construction of a mine on the lands, NANA maintains the right to purchase between a 16%-25% ownership interest in the mine or retain a 15% net proceeds royalty which is payable after Trilogy Metals US has recovered certain historical costs, including capital and cost of capital. Should NANA elect to purchase an ownership interest, consideration will be payable equal to all historical costs incurred on the properties at the elected percentage purchased less $40 million, not to be less than zero. The parties would form a joint venture and be responsible for all future costs, including capital costs of the mine based on their pro-rata share. NANA would also be granted a net smelter return royalty of between 1% and 2.5% upon the execution of a mining lease or a surface use agreement, the amount of which is determined by the classification of land from which production originates.

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Schedule of Mineral Property Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	May 31, 2019	May 31, 2018	May 31, 2019	May 31, 2018
Mineral property expense	$ 2,906	$ 2,475	$ 4,441	$ 3,606
Alaska, USA [Member]
Community	146	154	264	244
Drilling	173	180	173	180
Engineering	303	186	624	505
Environmental	136	81	271	169
Geochemistry and geophysics	593	591	758	646
Land and permitting	174	166	360	359
Project support	778	601	1,004	677
Other income	0	(2)	(1)	(20)
Wages and benefits	$ 603	$ 518	$ 988	$ 846

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Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	May 31, 2019	Nov. 30, 2018
Trade accounts payable	$ 834	$ 400
Accrued liabilities	474	503
Accrued salaries and vacation	173	746
Due to related parties	0	8
Accounts payable and accrued liabilities	$ 1,481	$ 1,657

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Share capital (Narrative) (Details) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended				6 Months Ended				12 Months Ended
	Apr. 20, 2018 USD ($) $ / shares shares	May 31, 2019 USD ($) $ / shares shares	Feb. 28, 2019 USD ($)	May 31, 2018 USD ($) shares	Feb. 28, 2018 USD ($)	May 31, 2019 USD ($) $ / shares shares	May 31, 2019 USD ($) $ / shares $ / shares shares	May 31, 2018 USD ($) $ / shares shares	May 31, 2018 USD ($) $ / shares	Nov. 30, 2018 USD ($) shares	May 31, 2019 $ / shares
Stock options granted, weighted average exericse price | $ / shares							$ 2.96		$ 1.04
Stock options granted, weighted average exercise price | $ / shares						$ 1.08		$ 0.37
Stock-based compensation		$ 664	$ 1,939	$ 151	$ 922
Non-vested stock options outstanding | shares		11,129,781				11,129,781	11,129,781
Weighted average exercise price options outstanding | $ / shares		$ 0.95				$ 0.95	$ 0.95
Aggregate intrinsic value, vested options		$ 17,600		5,900		$ 17,600	$ 17,600	$ 5,900	$ 5,900
Aggregate intrinsic value, options exercised						$ 300		100
Stock Issued During Period, Value, New Issues				28,750
Legal Fees	$ 1,800
Proceeds from Issuance of Common Stock	26,900
Common Stock [Member]
Stock-based compensation		$ 0	$ 0	0	$ 0
Stock Issued During Period, Value, New Issues	$ 28,700			$ 28,750						$ 28,750
Stock Issued During Period, Shares, New Issues | shares	24,784,482			24,784,482						24,784,482
Shares Issued, Price Per Share | $ / shares	$ 1.16
Non-Vested Options [Member]
Non-vested stock options outstanding | shares		1,841,672				1,841,672	1,841,672
Weighted average exercise price options outstanding | $ / shares											$ 1.79
Number of DSU's [Member]
Common stock committed for issuance | shares		11,927				11,927	11,927
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares		1,988				1,988	1,988
Stock Compensation Plan [Member]
Stock-based compensation						$ 660		$ 490
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | shares										412,501
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares										225,000
Approximationss [Member] | Non-Vested Options [Member]
Stock option expense						$ 900
New Employees [Member]
Stock options granted | shares						2,527,500		2,125,000
Directors, Employees and Services Providers [Member]
Stock-based compensation						$ 1,940		$ 580

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Schedule of Common Shares Issued and Outstanding (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended
	Apr. 20, 2018	May 31, 2018	May 31, 2019	Nov. 30, 2018
Bought deal financing		$ 28,750
Share issuance costs		$ (1,819)
Share capital [Member]
Number of shares			131,585,612	105,684,523
Ascribed value			$ 164,069	$ 136,525
Bought deal financing (Shares)	24,784,482	24,784,482		24,784,482
Bought deal financing	$ 28,700	$ 28,750		$ 28,750
Share issuance costs		$ (1,819)		$ (1,805)
Exercise of options (shares)			145,294	315,148
Exercise of options			$ 81	$ 140
Restricted Share Units (Shares)			412,501	800,000
Restricted Share Units			$ 424	$ 457
NovaGold DSU Conversion (Shares)				1,459
NovaGold DSU conversion				$ 2
Number of shares			132,143,407	131,585,612
Ascribed value			$ 164,574	$ 164,069

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Schedule of fair value of the stock options,Valuation Assumptions (Details)	6 Months Ended
	May 31, 2019 $ / shares
Risk-free interest rates	2.03%
Exercise price	$ 3.01
Expected life	3 years
Expected volatility	75.00%
Expected dividends	0.00%

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Schedule of Stock Options Activity (Details)	6 Months Ended
	May 31, 2019 $ / shares shares	May 31, 2019 $ / shares shares	May 31, 2018 $ / shares	May 31, 2018 $ / shares
Weighted average exercise price, Granted		$ 2.96		$ 1.04
Weighted average exercise price, Exercised	$ 1.08		$ 0.37
Balance - End of Period, Number of stock options | shares	11,129,781	11,129,781
Balance - End of Period, Weighted average exercise price	$ 0.95
Stock option [Member]
Balance – beginning of the year, Number of stock Options | shares	8,821,434	8,821,434
Balance – beginning of the year, Weighted average exercise price	$ 0.60
Number of options, Granted | shares	2,527,500	2,527,500
Weighted average exercise price, Granted	$ 2.19
Number of options, Exercised | shares	(219,153)	(219,153)
Weighted average exercise price, Exercised	$ 0.77
Balance - End of Period, Number of stock options | shares	11,129,781	11,129,781
Balance - End of Period, Weighted average exercise price	$ 0.95

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Schedule of Disclosure of Stock Options Outstanding (Details)	6 Months Ended
	May 31, 2019 $ / shares shares
Number of outstanding options | shares	11,129,781
Weighted average years to expiry	2 years 6 months 10 days
Weighted average exercise price options outstanding	$ 0.95
Number of exercisable options | shares	9,288,109
Weighted average exercise price exercisable	$ 0.79
Number of unvested options | shares	1,841,672
Range 1 [Member]
Exercise price lower range limit	$ 0.33
Exercise price upper range limit	$ 0.50
Number of outstanding options | shares	3,920,614
Weighted average years to expiry	1 year 2 months 19 days
Weighted average exercise price options outstanding	$ 0.38
Number of exercisable options | shares	3,920,614
Weighted average exercise price exercisable	$ 0.38
Number of unvested options | shares	0
Range 2 [Member]
Exercise price lower range limit	$ 0.51
Exercise price upper range limit	$ 1.00
Number of outstanding options | shares	4,346,667
Weighted average years to expiry	2 years 5 months 12 days
Weighted average exercise price options outstanding	$ 0.71
Number of exercisable options | shares	3,898,331
Weighted average exercise price exercisable	$ 0.70
Number of unvested options | shares	448,336
Range 3 [Member]
Exercise price lower range limit	$ 1.01
Exercise price upper range limit	$ 1.50
Number of outstanding options | shares	225,000
Weighted average years to expiry	3 years 10 months 13 days
Weighted average exercise price options outstanding	$ 1.31
Number of exercisable options | shares	125,000
Weighted average exercise price exercisable	$ 1.22
Number of unvested options | shares	100,000
Range Four [Member]
Exercise price lower range limit	$ 1.51
Exercise price upper range limit	$ 2.00
Number of outstanding options | shares	120,000
Weighted average years to expiry	4 years 1 month 9 days
Weighted average exercise price options outstanding	$ 1.79
Number of exercisable options | shares	86,666
Weighted average exercise price exercisable	$ 1.76
Number of unvested options | shares	33,334
Range Five [Member]
Exercise price lower range limit	$ 2.01
Exercise price upper range limit	$ 2.52
Number of outstanding options | shares	2,517,500
Weighted average years to expiry	4 years 6 months 10 days
Weighted average exercise price options outstanding	$ 2.19
Number of exercisable options | shares	1,257,498
Weighted average exercise price exercisable	$ 2.19
Number of unvested options | shares	1,260,002

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Schedule of Unit Plans and Changes Activity (Details)	6 Months Ended
	May 31, 2019 shares
Number of RSU's [Member]
Balance – beginning of the year	400,002
Granted	225,000
Vested/paid	(412,501)
Balance - end of period	212,501
Number of DSU's [Member]
Balance – beginning of the year	1,182,106
Granted	104,489
Vested/paid	0
Balance - end of period	1,286,595

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Schedule of Warrants, Activity (Details) - $ / shares	6 Months Ended	12 Months Ended
	May 31, 2019	Nov. 30, 2018
Balance – beginning of the year	6,521,740
Weighted average years to expiry	1 month 2 days	7 months 2 days
Weighted average exercise price	$ 1.52	$ 1.52
Balance - end of period	6,521,740	6,521,740

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Financial instruments (Narrative) (Details)	3 Months Ended
	May 31, 2019 USD ($)	May 31, 2019 CAD ($)	Nov. 30, 2018 USD ($)
Accounts receivable	$ 171,000		$ 23,000
Interest rate loss	$ (300,000)
Canadian Limit Due to Currency Risk [Member]
Cash		$ 244,000
Accounts receivable		26,000
Accounts payable		$ 442,000
Change in foreign exchange rate	10.00%	10.00%
Foreign exchange (gain) loss	$ (13,000)
Change in interest rate	1.00%

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Schedule of Contractually Obligated Cash Flow Requirements (Details) $ in Thousands	May 31, 2019 USD ($)
Total	$ 1,481
Within 1 Year	1,481
1 - 2 Years	0
2 - 5 Years	0
Thereafter	0
Accounts payable and accrued liabilities [Member]
Total	1,481
Within 1 Year	1,481
1 - 2 Years	0
2 - 5 Years	0
Thereafter	$ 0

XML

Commitment (Details) $ in Thousands	May 31, 2019 USD ($)
One year	$ 231
Years 2 through 5	457
Beyond 5 years	414
Total	$ 1,102

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Subsequent events (Narrative) (Details) - Subsequent Event [Member] $ in Millions	Jun. 28, 2019 USD ($) shares
Subsequent Event [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares	6,521,740
Proceeds from Warrant Exercises | $	$ 9.9