Mineral properties and development costs (Tables)

9 Months Ended

Aug. 31, 2019

Mineral properties and development costs

Schedule of mineral properties and development costs

	in thousands of dollars
	November 30, 2018	Acquisition costs	August 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

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

	In thousands of dollars
	Three months ended	Three months ended	Nine months ended	Nine months ended
	August 31, 2019	August 31, 2018	August 31, 2019	August 31, 2018
	$	$	$	$
Alaska, USA
Community	164	81	428	324
Drilling	4,760	3,624	4,933	3,804
Engineering	663	245	1,287	750
Environmental	153	313	424	482
Geochemistry and geophysics	252	420	1,010	1,066
Land and permitting	163	145	523	504
Project support	3,062	2,703	4,066	3,381
Other income	—	—	(1)	(20)
Wages and benefits	1,734	1,520	2,722	2,366
Mineral property expense	10,951	9,051	15,392	12,657