10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended February 28, 2021

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 ☒ 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 ☒ 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 ◻ Non-accelerated filer ☒ Smaller reporting company☒ 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 ☒

As of April 7, 2021, the registrant had 144,292,774 Common Shares, no par value, outstanding.

Trilogy Metals Inc.

Table of Contents

		Page
PART I - FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
Item 4.	Controls and Procedures	25
PART II - OTHER INFORMATION		26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	26

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Trilogy Metals Inc.

Interim Consolidated Balance Sheets

(unaudited)

		in thousands of US dollars
	February 28, 2021		November 30, 2020
	$		$
Assets
Current assets
Cash and cash equivalents	9,631		11,125
Accounts receivable (note 3)	24		129
Deposits and prepaid amounts	217		184
	9,872		11,438
Investment in Ambler Metals LLC (note 4)	172,025		173,145
Fixed assets (note 5)	189		206
Right of use asset (note 7 (a))	448		476
	182,534		185,265
Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 6)	551		888
Current portion of lease liability	166		158
	717		1,046
Long-term portion of lease liability (note 7 (b))	374		408
	1,091		1,454
Shareholders’ equity
Share capital (note 8) – unlimited common shares authorized, no par value Issued – 144,214,485 (2020 – 144,137,850)	180,080		179,746
Contributed surplus	122		122
Contributed surplus – options (note 8(a))	25,081		23,303
Contributed surplus – units (note 8(b))	1,621		1,585
Deficit	(25,461)		(20,945)
	181,443		183,811
	182,534		185,265

Commitments (note 10)

(See accompanying notes to the interim consolidated financial statements)

/s/ Tony Giardini, President, CEO and Director	/s/ Kalidas Madhavpeddi, Director
Approved on behalf of the Board of Directors

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 3

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Trilogy Metals Inc.

Interim Consolidated Statements of Income (Loss)

and Comprehensive Income (Loss)

(unaudited)

	in thousands of US dollars, except share and per share amounts
	For the three months ended
		February 28, 2021	February 29, 2020
		$	$
Expenses
Amortization		17	42
Foreign exchange loss		35	23
General and administrative		401	651
Investor relations		154	126
Mineral properties expense (note 4(a))		—	1,545
Professional fees		229	668
Salaries		439	224
Salaries – stock-based compensation		2,148	1,196
Total expenses		3,423	4,475
Other items
Gain on derecognition of assets contributed to joint venture (note 4(a))		—	(175,770)
Share of loss on equity investment (note 4(b))		1,120	178
Interest and other income		(5)	(62)
Services agreement income (note 4(e))		(22)	—
Comprehensive (loss) earnings for the year		(4,516)	171,179
Basic (loss) earnings per common share		(0.03)	1.22
Diluted (loss) earnings per common share		(0.03)	1.16
Basic weighted average number of common shares outstanding		144,163,869	140,616,672
Diluted weighted average number of common shares outstanding		144,163,869	147,649,507

(See accompanying notes to the interim consolidated financial statements)

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 4

Trilogy Metals Inc.

Interim Consolidated Statements of Changes in Shareholders’ Equity

(unaudited)

in thousands of US dollars, except share amounts

					Contributed	Contributed		Total
				Contributed	surplus –	surplus –		shareholders’
	Number of shares	Share capital	Warrants	surplus	options	units	Deficit	equity
	outstanding	$	$	$	$	$	$	$
Balance – November 30, 2019	140,427,761	177,971	—	122	21,123	1,759	(182,712)	18,263
Exercise of options	19,514	6	—	—	(6)	—	—	—
Restricted Share Units	212,501	330	—	—	—	(330)	—	—
Stock-based compensation	—	—	—	—	1,155	41	—	1,196
Loss for the period	—	—	—	—	—	—	171,179	171,179
Balance - February 29, 2020	140,659,776	178,307	—	122	22,272	1,470	(11,533)	190,638
Balance – November 30, 2020	144,137,850	179,746	—	122	23,303	1,585	(20,945)	183,811
Exercise of options	76,635	334	—	—	(334)	—	—	—
Stock-based compensation	—	—	—	—	2,112	36	—	2,148
Loss for the period	—	—	—	—	—	—	(4,516)	(4,516)
Balance – February 28, 2021	144,214,485	180,080	—	122	25,081	1,621	(25,461)	181,443

(See accompanying notes to the interim consolidated financial statements)

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 5

Trilogy Metals Inc.

Interim Consolidated Statements of Cash Flows

(unaudited)

	in thousands of US dollars
	For the three months ended
	February 28, 2021		February 29, 2020
		$		$
Cash flows used in operating activities
(Loss) earnings for the period		(4,516)		171,179
Adjustments to reconcile net loss to cash flows in operating activities
Amortization		17		42
Right of use asset amortization and lease accretion		38		60
Office lease payments		(49)		(54)
Loss on working capital written-off upon joint venture formation		—		18
Gain on derecognition of assets (note 4(a))		—		(175,770)
Loss on equity investment in Ambler Metals LLC (note 4(b))		1,120		178
Unrealized foreign exchange loss		14		25
Stock-based compensation		2,148		1,196
Net change in non-cash working capital
Decrease (increase) in accounts receivable		105		(154)
Decrease (increase) in deposits and prepaid amounts		(33)		419
(Decrease) in accounts payable and accrued liabilities		(337)		(1,080)
Decrease in cash from operating activities		(1,493)		(3,941)
Effect of exchange rate on cash and cash equivalents		(1)		(16)
Cash and cash equivalents – beginning of period		11,125		19,174
Cash and cash equivalents – end of the period		9,631		15,217

(See accompanying notes to the interim consolidated financial statements)

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 6

Trilogy Metals Inc.

Notes to the Interim 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, through our equity investee (see note 4), 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 interim 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 intercompany transactions are eliminated on consolidation. For variable interest entities (“VIEs”) where Trilogy is not the primary beneficiary, we use the equity method of accounting.

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

The unaudited interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position as of February 28, 2021 and our results of operations and cash flows for the three months ended February 28, 2021 and February 29, 2020. The results of operations for the three months ended February 28, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2021.

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, 2020, filed with the U.S. Securities and Exchange Commission (“SEC”) and Canadian securities regulatory authorities on February 12, 2021.

These interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on April 6, 2021.

3)    Accounts receivable

	in thousands of dollars
	February 28, 2021	November 30, 2020
	$	$
GST input tax credits	23	15
Ambler Metals LLC	1	114
Accounts receivable	24	129

The balance due from Ambler Metals LLC (see note 4 below) consists of services rendered by Trilogy and reimbursements for invoices paid by Trilogy on behalf of Ambler Metals LLC per a service agreement. The balance was paid in full by Ambler Metals LLC subsequent to the quarter end.

4)    Equity method investment

(a) Formation of Ambler Metals LLC

On February 11, 2020, the Company completed the formation of a 50/50 joint venture named Ambler Metals LLC with South32 Limited (“South32”). As part of the formation of the joint venture, Trilogy contributed all its assets associated with the UKMP, including the Arctic and Bornite Projects, while South32 contributed US$145 million, resulting in each

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 7

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

party’s subsidiaries directly owning a 50% interest in Ambler Metals LLC. To assist Ambler Metals during the initial set up phase, Trilogy was paying all of Ambler Metals LLC’s invoices and being reimbursed pursuant to a services agreement (the “Services Agreement”) between Trilogy and Ambler Metals LLC until the back office was fully transitioned to a new permanent team employed by the joint venture. The Services Agreement ended on December 31, 2020.

Ambler Metals LLC is an independently operated company jointly controlled by Trilogy and South32 through a four-member board, of which two members are appointed by Trilogy based on its 50% equity interest. All significant decisions related to the UKMP require the approval of both companies. We determined that Ambler Metals LLC is a VIE because it is expected to need additional funding from its owners for its significant activities. However, we concluded that we are not the primary beneficiary of Ambler Metals LLC as the power to direct its activities, through its board, is shared under the Ambler Metals LLC limited liability company agreement. As we have significant influence over Ambler Metals LLC through our representation on its board, we use the equity method of accounting for our investment in Ambler Metals LLC. Our investment in Ambler Metals LLC was initially measured at its fair value of $176 million upon recognition. Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals LLC, which, as at February 28, 2021, totaled $172 million. The following table summarizes the gain on recognition of the UKMP assets upon transfer to the Ambler Metals LLC joint venture on February 11, 2020.

	in thousands of dollars
	$
Fair value ascribed to Ambler Metals LLC interest	176,000
Less: carrying value of contributed /eliminated assets
Mineral properties	(30,631)
Property, plant and equipment	(618)
Elimination of Fairbanks warehouse right of use asset	(93)
Elimination of prepaid State of Alaska mining claim fees	(303)
Add:
Reimbursement of claims staking	44
Demobilization costs of drills	278
Cancellation of Fairbanks warehouse lease liability	93
Fair value of mineral properties purchase option	31,000
Gain on derecognition	175,770

No additional mineral properties expenses were incurred subsequent to February 11, 2020 as upon the formation of the joint venture with South 32, all mineral properties previously held by the Company were contributed to Ambler Metals LLC. Prior to the formation of the joint venture, the Company had also incurred $0.7 million in Arctic Project feasibility costs that are included in the mineral properties expense balance of $1.5 million for the three-month period ended February 29, 2020.

(b) Carrying value of equity method investment

During the three-month period ending February 28, 2021, Trilogy recognized, based on its 50% ownership interest in Ambler Metals LLC, an equity loss equivalent to its pro rata share of Ambler Metals LLC's comprehensive loss of $2.2 million for the three month period ending February 28, 2021. The carrying value of Trilogy’s 50% investment in Ambler Metals LLC as at February 28, 2021 is summarized on the following table.

	in thousands of dollars
	$
November 30, 2020, investment in Ambler Metals LLC.	173,145
Share of loss on equity investment for the three month period ending February 28, 2021	(1,120)
February 28, 2021, investment in Ambler Metals LLC.	172,025

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 8

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

(c) The following table summarizes Ambler Metals LLC's Balance Sheet as at February 28, 2021.

	in thousands of dollars
	February 28, 2021	November 30, 2020
	$	$
Current assets: Cash, deposits and prepaid expenses	79,576	82,226
Non - current assets: Property, equipment and mineral properties	32,038	31,287
Loan receivable from South32	58,747	58,478
Current liabilities: Accounts payable and accrued liabilities	(1,310)	(1,445)
Non - current liabilities: Lease obligation	(795)	(51)
Net assets	168,256	170,495

(d) The following table summarizes Ambler Metals LLC's comprehensive loss for the three-month period ending February 28, 2021.

	in thousands of dollars
	Period ending	Period ending
	February 28, 2021	February 29, 2020
	$	$
Amortization	16	12
Mineral properties expense	1,400	167
General and administrative expense	1,095	219
Interest income	(272)	(43)
Comprehensive loss	2,239	355

(e) Related party transactions - services agreement income

The Company charged $22,151 of expenses related to technical services, including geological, engineering, environmental and human resources, and accounting services in connection with the Services Agreement. In addition, the Company received payments of $4,053 related to operating expenses paid on behalf of Ambler Metals during the three-month period ending February 28, 2021.

5)    Fixed assets

	in thousands of dollars
	February 28, 2021
		Accumulated
	Cost	amortization	Net
	$	$	$
British Columbia, Canada
Furniture and equipment	63	(45)	18
Leasehold improvements	253	(82)	171
Computer hardware and software	115	(115)	—
	431	(242)	189

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 9

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

	in thousands of dollars
	November 30, 2020
		Accumulated
	Cost	amortization	Net
	$	$	$
British Columbia, Canada
Furniture and equipment	63	(41)	22
Leasehold improvements	253	(69)	184
Computer hardware and software	115	(115)	—
	431	(225)	206

6)    Accounts payable and accrued liabilities

		in thousands of dollars
	February 28, 2021	November 30, 2020
	$	$
Trade accounts payable	275	226
Accrued liabilities	166	198
Accrued salaries and vacation	110	464
Accounts payable and accrued liabilities	551	888

7)    Leases

(a) Right-of-use asset

	in thousands of dollars
	$
ASC transition as at December 1, 2019	681
Amortization	(162)
Lease accretion	50
Derecognition of Fairbanks warehouse lease	(93)
Balance as at November 30, 2020	476
Amortization	(38)
Lease accretion	10
Balance as at February 28, 2021	448

(b) Lease liabilities

The Company’s lease arrangements primarily consist of an operating lease for our office space ending in June 2024. There are no extension options.

Total lease expense recorded within general and administrative expenses was comprised of the following components:

	in thousands of dollars
	Three months ended	Three months ended
	February 28, 2021	February 29, 2020
	$	$
Operating lease costs	38	50
Variable lease costs	35	34
Total lease expense	73	84

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 10

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

Variable lease costs consist primarily of the Company’s portion of operating costs associated with the office space lease as the Company elected to apply the practical expedient not to separate lease and non-lease components.

As of February, 28, 2021, the weighted-average remaining lease term was 3.3 years and the weighted-average discount rate is 8%. Significant judgment was used in the determination of the incremental borrowing rate which included estimating the Company’s credit rating.

Supplemental cash and non-cash information relating to our leases during the three months ended February 28, 2021 are as follows:

● Cash paid for amounts included in the measurement of lease liabilities was $48,830.

Future minimum payments relating to the lease recognized in our balance sheet as of February 28, 2021 are as follows:

	in thousands of dollars
	February 28, 2021
Fiscal year	$
2021	151
2022	206
2023	212
2024	126
Total undiscounted lease payments	695
Effect of discounting	(155)
Present value of lease payments recognized as lease liability	540

8)    Share capital

Authorized:

unlimited common shares, no par value

	in thousands of dollars, except share amounts
	Number of shares	Ascribed value
		$
November 30, 2019	140,427,761	177,971
Exercise of options	3,297,588	1,133
Restricted Share Units	412,501	642
November 30, 2020	144,137,850	179,746
Exercise of options	76,635	334
February 28, 2021, issued and outstanding	144,214,485	180,080

(a) Stock options

During the three-month period ended February 28, 2021, the Company granted 3,374,150 options (2020 - 2,050,000 options) at a weighted-average exercise price of CAD$2.52 (2020 - CAD$3.02) to employees, consultants and directors exercisable for a period of five years with various vesting terms from immediate vesting to vesting over a two-year period. The weighted-average fair value attributable to options granted in the period was $0.84 (2020 - $0.99).

For the three-month period ended February 28, 2021, Trilogy recognized a stock-based compensation charge of $2.10 million (2019 – $1.16 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 11

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

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

Assumptions used in the pricing model for the three-month period ended February 28, 2021 are as provided below.

	February 28, 2021
Risk-free interest rates	0.31%
Exercise price	CAD$2.52
Expected life	3 years
Expected volatility	64.4%
Expected dividends	Nil

As of February 28, 2021, there were 3,374,150 non-vested options outstanding with a weighted average exercise price of $2.07; the non-vested stock option expense not yet recognized was $1.63 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 three-month period ended February 28, 2021 is as follows:

	February 28, 2021
		Weighted average
		exercise price
	Number of options	$
Balance – beginning of the period	8,647,500	1.88
Granted	3,374,150	1.98
Exercised	(381,373)	1.97
Cancelled	(120,000)	2.42
Balance – end of the period	11,520,277	1.90

The following table summarizes information about the stock options outstanding at February 28, 2021.

	Outstanding			Exercisable		Unvested
			Weighted		Weighted
	Number of	Weighted	average	Number of	average	Number of
	outstanding	average years	exercise price	exercisable	exercise price	unvested
Range of price	options	to expiry	$	options	$	options
$0.55 to $1.00	1,705,627	1.34	0.69	1,705,627	0.69	—
$1.01 to $1.50	75,000	1.81	1.15	75,000	1.15	—
$1.51 to $2.00	4,277,150	4.54	1.95	2,779,483	1.94	1,497,667
$2.01 to $2.50	5,425,000	3.72	2.24	3,618,330	2.28	1,806,670
$2.51 to $3.00	37,500	3.23	2.68	37,500	2.68	—
	11,520,277	3.66	1.90	8,215,940	1.82	3,304,337

The aggregate intrinsic value of vested share options (the market value less the exercise price) at February 28, 2021 was $3.3 million (2020 - $5.9 million) and the aggregate intrinsic value of exercised options for the three months ended February 28, 2021 was $0.17 million (2020 - $0.04 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

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 12

Trilogy Metals Inc.

Notes to the Interim Consolidated Financial Statements

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 three-month period ended February 28, 2021 is as follows:

	Number of DSUs
Balance – beginning of the period	1,218,520
Granted	19,992
Balance – end of the period	1,238,512

For the three-month period ended February 28, 2021, Trilogy recognized a stock-based compensation charge of $0.04 million (2020- $0.04 million), net of estimated forfeitures.  The Company did not issue any RSU grants during the three-month period ended February 28, 2021. As of February 28, 2021, there were no outstanding RSU grants.

9)    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.

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 February 28, 2021 is limited to the Canadian dollar balances consisting of cash of approximately CDN$78,000, accounts receivable of approximately CDN$29,000 and accounts payable of approximately CDN$413,000. 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 $24,000.

(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.

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 13

Trilogy Metals Inc.

Notes to the Interim Consolidated 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 February 28, 2021 are as follows:

	in thousands of dollars
	Total	< 1 Year	1–2 Years	2–5 Years	Thereafter
	$	$	$	$	$
Accounts payable and accrued liabilities	551	551	—	—	—
Office lease	694	201	421	72	—
	1,245	752	421	72	—

(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 February 28, 2021, a 1% change in interest rates would result in a $200 change in net loss, assuming all other variables remain constant.

10)    Commitment

The Company has commitments with respect to an office lease requiring future minimum lease payments as summarized in note 7(b) above.

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 14

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

Trilogy Metals Inc.

Management’s Discussion & Analysis

For the Quarter Ended February 28, 2021

(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 the Company’s work programs and budgets; perceived merit of properties, exploration results and budgets, the Company and Ambler Metals’s funding requirements, 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 Ambler Metals’ plans and expectations relating to its Upper Kobuk Mineral Projects, sufficiency of the $145 million subscription price to fund the UKMP; impact of COVID-19 on the Company’s operations; market prices for precious and base metals; statements regarding the Ambler Road Project (also known as the Ambler Mining District Industrial Access Project); 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 the beliefs, expectations and opinions of management on the date the statements are made, as well as on a number of material assumptions, which could prove to be significantly incorrect, including about:

● our ability to achieve production at the Upper Kobuk Mineral Projects;

● the accuracy of our mineral resource and reserve estimates;

● the results, costs and timing of future exploration drilling and engineering;

● timing and receipt of approvals, consents and permits under applicable legislation;

● the adequacy of our financial resources;

● the receipt of third party contractual, regulatory and governmental approvals for the exploration, development, construction and production of our properties and any litigation or challenges to such approvals;

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

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For the Quarter Ended February 28, 2021 15

● continued good relationships with South32 Limited (‘South32”), our joint venture partner, as well as local communities and other stakeholders;

● there being no significant disruptions affecting operations, whether relating to labor, supply, power damage to equipment or other matter;

● expected trends and specific assumptions regarding metal prices and currency exchange rates; and

● prices for and availability of fuel, electricity, parts and equipment and other key supplies remaining consistent with current levels.

We have also assumed that no significant events will occur outside of our normal course of business. Although we have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. We believe that the assumptions inherent in the forward-looking statements are reasonable as of the date of this MD&A. However, forward-looking statements are not guarantees of future performance and, accordingly, undue reliance should not be put on such statements due to the inherent uncertainty therein.

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 the COVID-19 pandemic;

● 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;

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

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

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

● risks related to our dependence on a third party for the development of our projects;

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

● commodity price fluctuations;

● 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

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For the Quarter Ended February 28, 2021 16

development of mineral properties, and related cost increases;

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

● uncertainty related to inferred mineral resources;

● 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;

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

● 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 our control;

● 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;

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

● risks related to the acquisition and integration of operations or projects;

● 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 market events and general economic conditions;

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

● uncertainty as to the volatility in the price of the Company’s common 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;

● risks related to global climate change;

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

● 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

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For the Quarter Ended February 28, 2021 17

● increased regulatory compliance costs, associated with rules and regulations promulgated by the United States Securities and Exchange Commission, Canadian Securities Administrators, the NYSE American, the Toronto Stock Exchange, and the Financial Accounting Standards Boards, and more specifically, our efforts to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act;

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 12, 2021, 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.

General

This Management’s Discussion and Analysis (“MD&A”) of Trilogy Metals Inc. (“Trilogy”, “Trilogy Metals”, “the Company” or “we”) is dated April 6, 2021 and provides an analysis of our unaudited interim financial results for the quarter ended February 28, 2021 compared to the quarter ended February 29, 2020.

The following information should be read in conjunction with our February 28, 2021 unaudited interim condensed 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, 2020. 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.

Richard Gosse, P.Geo., 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 the exploration and development of mineral properties, through our equity investee, 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”) were contributed into a 50/50 joint venture named Ambler Metals LLC (“Ambler Metals”) between Trilogy and South32 on February 11, 2020 (see below). The projects contributed to Ambler Metals consist of: i) the 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 hosts the Bornite carbonate-hosted copper project (the “Bornite Project”) and related assets.

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For the Quarter Ended February 28, 2021 18

Project Activities

2021 Operating Budget for the Upper Kobuk Mineral Projects

In a press release dated November 19, 2020, the Company announced that Ambler Metals had approved a 2021 program budget of approximately $27 million for the advancement of the UKMP. The budget is to be 100% funded by Ambler Metals. The 2021 program budget includes 7,600 meters of infill and metallurgical drilling at the Arctic Project, 7,000 meters of exploration drilling within the Ambler Volcanogenic Massive Sulphide (“VMS”) Belt, geological and engineering work focused on getting the Arctic Project ready for permitting and permitting efforts focused on submission of the Federal 404 permit application in the second half of 2021.

COVID Safety Measures

During the 2021 field season, we will be adhering to a strict COVID safety protocol regime which includes limited personnel rotations, COVID-19 testing, stringent sanitation and disinfection procedures and contact tracing. These protocols will be followed throughout the summer field season in strict observance to Government of Alaska guidelines.

Arctic Project

Activities at the Arctic Project will focus on an additional 7,600 meters of drilling which will have the dual purpose of extracting additional material for metallurgical work and for the conversion of mineral resources into the measured category. The metallurgical program that is associated with this drilling will support variability test work and pilot plant work which will commence later in 2021. Engineering work is continuing at Arctic with the aim of submitting the application for the Notice of Intent for the 404 Dredge and Fill Permit, which is covered by the Clean Water Act, to the United States Army Corps of Engineers.

Regional Exploration Project

Following up from the 2019 work performed along the 100-kilometer Ambler VMS belt, Ambler Metals will continue exploration efforts along the belt and around Bornite to discover and define additional deposits. During the 2021 field season, Ambler Metals plans to conduct a 7,000-meter regional exploration drill campaign at drill-ready targets. In addition, detailed geologic mapping, geochemical soil sampling and possibly ground geophysics is planned.

Ambler Mining District Industrial Access Project (AMDIAP)

On January 6, 2021, the United States Bureau of Land Management (“BLM”), the National Park Service (“NPS”) and the Alaska Industrial Development and Export Authority (“AIDEA”) signed Right-of-Way agreements giving AIDEA the ability to cross federally owned and managed lands along the route for the Ambler Road Project approved in the Joint Record of Decision. The agreements grant a 50-year right-of-way on federally owned and managed land by the federal agencies for the future development of the Ambler Mining District Industrial Access Road. The authorizing documents with the two agencies are the final federal permits required for the Ambler Road Project.

Development Funding Agreement with the Alaska Industrial Development and Export Authority (AIDEA)

In a press release dated February 11, 2021, the Company announced its approval for Ambler Metals to enter into an Ambler Access Development Agreement (the “Development Agreement”) with AIDEA.

The Development Agreement defines how AIDEA and Ambler Metals will work cooperatively together on the pre-development work for the Ambler Access Project to address funding and oversight of the project’s feasibility and permitting activities until the parties reach a decision on the construction of the project by the end of 2024 at the latest. The cost of the pre-development work and activities will be paid 50% by AIDEA and 50% by Ambler Metals based on an

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For the Quarter Ended February 28, 2021 19

annually agreed program and budget. Under the Development Agreement, Ambler Metals and AIDEA agree to contribute up to $35 million each for pre-development costs of the Ambler Access Project through December 31, 2024.

Joint Venture

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, which agreement was later assigned by South32 Operations Pty Ltd. 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. South32 exercised its option on December 19, 2019.

Formation of joint venture

On February 11, 2020, Trilogy completed the formation of the 50/50 joint venture with South32. Trilogy contributed all its assets associated with the 172,675-hectare UKMP, including the Arctic and Bornite Projects, while South32 contributed a subscription price of US$145 million (the “Subscription Price”), resulting in each party owning a 50% interest in Ambler Metals. The Subscription Price will be used to advance the Arctic and Bornite Projects, along with exploration in the Ambler mining district. With Ambler Metals being well funded, with access to $145 million, Trilogy does not expect to fund programs and budgets to advance the UKMP until the Subscription Price is spent by Ambler Metals. To assist Ambler Metals during the initial set up phase, Trilogy paid all of Ambler Metals’ invoices and was being reimbursed pursuant to a services agreement (the “Services Agreement”) until the back office was fully transitioned to a new team employed by Ambler Metals. The Services Agreement ended on December 31, 2020.

Ambler Metals is an independently operated company controlled by Trilogy and South32 through a four-member board of which two members are currently appointed by Trilogy based on its 50% equity interest. All significant decisions related to the UKMP require the approval of both companies. We determined that Ambler Metals is a variable interest entity, or VIE, because it is expected to need additional funding from its owners for its significant activities. However, we concluded that we are not the primary beneficiary of Ambler Metals as the power to direct its activities, through its board, is shared under the limited liability company agreement. As we have significant influence over Ambler Metals through our representation on its board, we use the equity method of accounting for our investment in Ambler Metals. Our investment in Ambler Metals was initially measured at its fair value of $176 million upon recognition. Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals, which, as of February 28, 2021, totaled $172 million.

During the three-month period ended May 31, 2020, Ambler Metals loaned $57.5 million back to South32 and retained $87.5 million. The loan has a 7-year maturity date, but Ambler Metals will begin to draw down on the loan with cash calls to South32 to fund its 50% share of the 2021 budget to advance development studies, resource drilling and regional exploration programs. The loan is secured by South32’s membership interest in Ambler Metals and guaranteed by South32 International Investment Holdings Pty Ltd. Trilogy currently estimates that the Subscription Price, which includes the funds to be repaid under the loan, will 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 Price payment of $145 million is expended, the parties will contribute funding pro rata, as contemplated by the operating agreement which governs Ambler Metals.

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For the Quarter Ended February 28, 2021 20

Summary of results

	Three months ended
	February 28, 2021		February 29, 2020
Selected expenses	$		$
Mineral properties and feasibility study expenses		—		1,545
General and administrative		401		651
Investor relations		154		126
Professional fees		229		668
Salaries		439		224
Salaries – stock-based compensation		2,148		1,196
Gain on derecognition of assets contributed to joint venture		—		(175,770)
Share of loss on equity investment		1,120		178
Comprehensive earnings (loss) for the year		(4,516)		171,179
Basic earnings (loss) per common share		(0.03)		1.22
Diluted earnings (loss) per common share		(0.03)		1.16

For the three months ended February 28, 2021, Trilogy reported net loss of $4.5 million (or $0.03 basic and diluted loss per common share). For the comparable period in 2020, we reported net earnings of $171 million (or $1.22 basic and $1.16 diluted earnings per common share). This first quarter difference is primarily due to the $176 million gain on derecognition of mineral property assets contributed to Ambler Metals upon formation of the joint venture on February 11, 2020. This is offset by $1.5 million of mineral property expenses incurred during the first quarter of 2020. Furthermore, our share of loss in equity in investment is $0.94 million higher in the current quarter as the comparative does not include a full quarter of costs for the equity pick up; it reflects our pro rata 50% share of Ambler’s net loss from the formation of the joint venture on February 11, 2020 through to the end of the quarter on February 29, 2020.

Other variances noted for the comparable period were: i) a decrease in general and administrative expenses of $0.3 million, primarily due to $0.1 million in travel cost savings (due to COVID-19 travel restrictions), additional regulatory fees of $0.1 million included in the comparative quarter as well as $0.1 million recruiting fees incurred in the comparative period for which there is no current period cost; ii) a decrease of $0.4 million in professional fees as the comparative period includes charges for the research and implementation of new accounting standards and legal and accounting fees in relation to the formation and valuation of the joint venture, all of which do not have a current period comparative; iii) an increase of $0.2 million in salaries is due to the addition of management during the second half of the prior year, for which there is no prior year first quarter comparative; iv) an increase of $1 million in stock-based compensation driven primarily by a 0.9 million increase in the number of  stock options that were granted and vested during the first quarter of 2021 versus the comparative period.

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For the Quarter Ended February 28, 2021 21

Selected financial data

Quarterly information

		in thousands of dollars,
		except per share amounts
	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019
	02/28/21	11/30/20	08/31/20	05/31/20	02/29/20	11/30/19	08/31/19	05/31/19
	$	$	$	$	$	$	$	$
Interest and other income	5	5	8	12	62	91	137	150
Mineral properties and feasibility study expenses	—	91	232	742	1,545	3,819	10,951	2,906
Share of loss on equity investment	1,120	1,022	1,094	561	178	—	—	—
Earnings (loss) for the period	(4,516)	(3,226)	(3,184)	(3,002)	171,179	(6,525)	(12,535)	(4,509)
Earnings (loss) per common share – basic	(0.03)	(0.04)	(0.02)	(0.02)	1.22	(0.05)	(0.09)	(0.04)
Earnings (loss) per common share – diluted	(0.03)	(0.01)	(0.01)	(0.02)	1.16	(0.05)	(0.09)	(0.04)

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. Subsequent to the formation

of the Joint Venture on February 11, 2020, project related costs may cause fluctuations in our quarterly results through our 50% share of the Joint Venture’s net operating loss.

For the first quarter of 2021, we reported comprehensive loss of $4.5 million, which consists of $3.4 million in operating expenses and $1.1 million for Trilogy’s 50% share of Ambler Metals’ operating loss. In the first quarter of 2020, we recognized a gain of $176 million from the contribution of our Alaskan mineral properties to the joint venture for which there is no current period comparative. Other variances, when compared to the three-month period ended February 29, 2020, include our pro rata share of the joint venture’s operating loss, which is $0.9 million higher in the current period and operating expenses, which are $1.1 million lower for the current period. The decrease in the operating expenses is primarily due to the elimination of $1.5 million in mineral properties expenses as the mineral properties were contributed to the joint venture during the first quarter of 2020 and a cost savings of $0.4 million from professional fees, offset by an increase of $1.0 million in stock-based compensation.

For the fourth quarter ended November 30, 2020, we incurred a loss of $3.2 million, which consists of $3.1 million in operating expense and $1.0 million for Trilogy’s share of Ambler Metals’ operating loss. When compared to the fourth quarter of 2019, the operating expenses were $3.5 million lower. The decrease is primarily due to the elimination of $3.8 million in mineral property expenses, a decrease of $0.4 million in professional fees, $0.3 million lower stock‐based compensation and a decrease of $0.2 million in general and administrative expenses. These cost savings were offset by a loss of $1.0 million on the equity method investment for which there is no comparatives for the fourth quarter of 2019, and an increase of $0.3 million in salaries due to new hires to the management team in the fourth quarter 2020.  

For the third quarter ended August 31, 2020, we reported a comprehensive loss of $3.2 million, which consists of $2.1 million in operating expenses and $1.1 million for Trilogy’s 50% share of Ambler Metals’ operating loss. When compared to the three-month period ended August 31, 2019, the operating expenses for the third quarter was $10.6 million lower. The decrease is primarily due to the elimination of $11 million in mineral properties expenses due to the formation of the joint venture for which there are no comparable expenses in the third quarter of 2020, offset by $1 million in feasibility study costs in the same period.

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For the Quarter Ended February 28, 2021 22

For the second quarter ended May 31, 2020, we reported a comprehensive loss of $3.0 million, which consists of $2.4 million in operating expenses and $0.6 million for Trilogy’s 50% share of Ambler Metals’ operating loss. There is no prior period comparative for our pro rata share of Ambler Metals’ operating loss as the joint venture formation was completed during fiscal 2020. When compared to the three-month period ended May 31, 2019, the operating expenses for the second quarter of 2020 was $2.1 million lower. The decrease is primarily due to the elimination of $2.9 million of mineral properties expense, offset by $0.7 million in feasibility study costs incurred in the second quarter of 2020.

Liquidity and capital resources

At February 28, 2021, we had $9.6 million in cash and cash equivalents and working capital of $9.2 million, which is sufficient to fund our ongoing operations for at least the next 12 months. The projects are fully funded by Ambler Metals and we do not anticipate needing to fund our 50% share of future expenditures to advance the projects until Ambler Metals’ $145 million is spent.

Contractual obligations

Contractual obligated undiscounted cash flow requirements as at February 28, 2021 are as follows.

	In thousands of dollars
	Total	<1 Year	1–2 Years	2–5 Years	Thereafter
	$	$	$	$	$
Accounts payable and accrued liabilities	551	551	—	—	—
Office lease	694	201	421	72	—
	1,245	752	421	72	—

Off-balance sheet arrangements

We have no material off-balance sheet arrangements.

Outstanding share data

At April 6, 2021, we had 144,292,774 common shares issued and outstanding. At April 6, 2021, we had outstanding, 11,404,650 stock options with a weighted-average exercise price of $1.93, no RSUs, as well as 1,251,726 DSUs and 11,927 NovaGold DSUs for which the holder is entitled to receive one common share for every six NovaGold shares received. Upon exercise of all the foregoing convertible securities, the Company would be required to issue an aggregate of 12,658,364 common shares.

New accounting pronouncements

There are no new accounting pronouncements affecting the company.

Critical accounting estimates

The most critical accounting estimates upon which our financial status depends are those requiring estimates of the

recoverability of our equity method investment in Ambler Metals LLC, income taxes and valuation of stock‐based compensation.

Impairment of Investment in Ambler Metals LLC

Management assesses the possibility of impairment in the carrying value of its equity method investment in Ambler Metals LLC whenever events or circumstances indicate that the carrying amount of the investment may not be recoverable. Significant judgments are made in assessing the possibility of impairment. Factors that may be indicative of

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an impairment include a loss in the value of an investment that is not temporary. Management considers several factors in considering if an indicator of impairment has occurred, including but not limited to, significant changes in the legal, business or regulatory environment, adverse changes in the use or physical condition of the underlying mineral properties asset, changes in the market interest rates or other market rates of return that are likely to significantly affect the discount rate used in the impairment assessment, significant adverse changes impacting the investee and internal reporting indicating the economic performance of an investment is, or will be, worse than expected.

These factors are subjective and require consideration at each period end. If an indicator of impairment is determined

to exist, the fair value of the impaired investment is determined based on the valuation of cohort companies with similar projects or upon the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants and observed market earnings multiples of comparable companies.

Management’s estimates of mineral prices, mineral resources, foreign exchange rates and projected future production

levels and operating capital are subject to risk and uncertainties that may affect the determination of the recoverability

of the equity method investment.

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 charges 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.

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 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

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For the Quarter Ended February 28, 2021 24

Item 4. Controls and Procedures

Disclosure controls and procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted by the Company under U.S. and Canadian securities legislation is recorded, processed, summarized and reported within the time periods specified in those rules, including providing reasonable assurance that material information is gathered and reported to senior management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to permit timely decisions regarding public disclosure. Management, including the CEO and CFO, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules of Canadian Securities Administration, as of February 28, 2021. Based on this evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective.

Internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act and National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim filings. 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.

Changes in internal control over financial reporting

There have been no changes in our internal controls over financial reporting during the fiscal quarter ended February 28, 2021 which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We continue to evaluate our internal control over financial reporting on an ongoing basis to identify improvements.

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For the Quarter Ended February 28, 2021 25

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 and the formation of the joint venture. Certain of these risks and uncertainties are under the heading “Risk Factors” under Trilogy’s Form 10-K dated February 12, 2021 which is available on SEDAR at www.sedar.com, 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 Securities

None.

Item 4. Mine Safety Disclosures

These disclosures are not applicable to us.

Item 5. Other Information

None.

Item 6. Exhibits

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

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 26

101	Interactive Data Files
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 27

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: April 7, 2021	TRILOGY METALS INC.
	By:	/s/ Tony Giardini
		Tony Giardini
		President and Chief Executive Officer
	By:	/s/ Elaine M. Sanders
		Elaine M. Sanders
		Vice President and Chief Financial Officer

Trilogy Metals Inc.
For the Quarter Ended February 28, 2021 28

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, Tony Giardini, 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:      April 7, 2021

By:	/s/ Tony Giardini
	Tony Giardini
	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:    April 7, 2021

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 February 28, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tony Giardini, 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:	April 7, 2021
By:	/s/ Tony Giardini
	Tony Giardini
	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 February 28, 2021, 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:	April 7, 2021
By:	/s/ Elaine Sanders
	Elaine Sanders
	Vice President and Chief Financial Officer
	(principal financial officer)

XML

Document and Entity Information - shares	3 Months Ended
	Feb. 28, 2021	Apr. 07, 2021
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Feb. 28, 2021
Document Transition Report	false
Entity File Number	1-35447
Entity Registrant Name	TRILOGY METALS INC.
Entity Incorporation, State or Country Code	A1
Entity Tax Identification Number	98-1006991
Entity Address, Address Line One	Suite 1150, 609 Granville Street
Entity Address, City or Town	Vancouver
Entity Address, State or Province	BC
Entity Address, Country	CA
Entity Address, Postal Zip Code	V7Y 1G5
City Area Code	604
Local Phone Number	638-8088
Title of 12(b) Security	Common Shares
Trading Symbol	TMQ
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		144,292,774
Current Fiscal Year End Date	--11-30
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001543418
Amendment Flag	false

XML

Interim Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Feb. 28, 2021	Nov. 30, 2020
Current assets
Cash and cash equivalents	$ 9,631	$ 11,125
Accounts receivable (note 3)	24	129
Deposits and prepaid amounts	217	184
Total Current Assets	9,872	11,438
Investment in Ambler Metals LLC (note 4)	172,025	173,145
Fixed assets (note 5)	189	206
Right of use asset (note 7 (a))	448	476
Total Assets	182,534	185,265
Current liabilities
Accounts payable and accrued liabilities (note 6)	551	888
Current portion of lease liability	166	158
Current liabilities	717	1,046
Long-term portion of lease liability (note 7 (b))	374	408
Total Liabilities	1,091	1,454
Shareholders' equity
Share capital (note 8) - unlimited common shares authorized, no par value Issued - 144,214,485 (2020 - 144,137,850)	180,080	179,746
Contributed surplus	122	122
Contributed surplus - options (note 8(a))	25,081	23,303
Contributed surplus - units (note 8(b))	1,621	1,585
Deficit	(25,461)	(20,945)
Total Shareholders' Equity	181,443	183,811
Total Liabilities and Shareholders' Equity	$ 182,534	$ 185,265

XML

Interim Consolidated Balance Sheets (Parenthetical) - $ / shares	Feb. 28, 2021	Nov. 30, 2020
Interim Consolidated Balance Sheets (unaudited)
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares, Issued	144,214,485	144,137,850

XML

Interim Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Expenses
Amortization	$ 17	$ 42
Foreign exchange loss	35	23
General and administrative	401	651
Investor relations	154	126
Mineral properties expense (note 4(a))		1,545
Professional fees	229	668
Salaries	439	224
Salaries - stock-based compensation	2,148	1,196
Total expenses	3,423	4,475
Other items
Gain on derecognition of assets contributed to joint venture (note 4(a))		(175,770)
Share of loss on equity investment (note 4(b))	1,120	178
Interest and other income	(5)	(62)
Services agreement income (note 4(e))	(22)
Comprehensive (loss) earnings for the year	$ (4,516)	$ 171,179
Basic (loss) earnings per common share	$ (0.03)	$ 1.22
Diluted (loss) earnings per common share	$ (0.03)	$ 1.16
Basic weighted average number of common shares outstanding	144,163,869	140,616,672
Diluted weighted average number of common shares outstanding	144,163,869	147,649,507

XML

Interim Consolidated Statements of Changes in Shareholders' Equity (unaudited) - USD ($) $ in Thousands	Share capital	Contributed surplus	Contributed surplus - options	Contributed surplus - units	Deficit	Total
Beginning Balance at Nov. 30, 2019	$ 177,971	$ 122	$ 21,123	$ 1,759	$ (182,712)	$ 18,263
Beginning Balance (Shares) at Nov. 30, 2019	140,427,761
Exercise of options	$ 6		(6)
Exercise of options (Shares)	19,514
Restricted Share Units	$ 330			(330)
Restricted Share Units (Shares)	212,501
Stock-based compensation			1,155	41		1,196
Loss for the period					171,179	171,179
Ending Balance at Feb. 29, 2020	$ 178,307	122	22,272	1,470	(11,533)	190,638
Ending Balance (Shares) at Feb. 29, 2020	140,659,776
Beginning Balance at Nov. 30, 2020	$ 179,746	122	23,303	1,585	(20,945)	183,811
Beginning Balance (Shares) at Nov. 30, 2020	144,137,850
Exercise of options	$ 334		(334)
Exercise of options (Shares)	76,635
Stock-based compensation			2,112	36		2,148
Loss for the period					(4,516)	(4,516)
Ending Balance at Feb. 28, 2021	$ 180,080	$ 122	$ 25,081	$ 1,621	$ (25,461)	$ 181,443
Ending Balance (Shares) at Feb. 28, 2021	144,214,485

XML

Interim Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Cash flows used in operating activities
(Loss) earnings for the period	$ (4,516)	$ 171,179
Adjustments to reconcile net loss to cash flows in operating activities
Amortization	17	42
Right of use asset amortization and lease accretion	38	60
Office lease payments	(49)	(54)
Loss on working capital written-off upon joint venture formation		18
Gain on derecognition of assets (note 4(a))		(175,770)
Loss on equity investment in Ambler Metals LLC (note 4(b))	1,120	178
Unrealized foreign exchange loss	14	25
Stock-based compensation	2,148	1,196
Net change in non-cash working capital
Decrease (increase) in accounts receivable	105	(154)
Decrease (increase) in deposits and prepaid amounts	(33)	419
(Decrease) increase in accounts payable and accrued liabilities	(337)	(1,080)
Decrease in cash from operating activities	(1,493)	(3,941)
Effect of exchange rate on cash and cash equivalents	(1)	(16)
Cash and cash equivalents - beginning of period	11,125	19,174
Cash and cash equivalents - end of period	$ 9,631	$ 15,217

XML

Nature of operations

3 Months Ended

Feb. 28, 2021

Nature of operations

Nature of operations

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, through our equity investee (see note 4), 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”).

XML

Summary of significant accounting policies

3 Months Ended

Feb. 28, 2021

Summary of significant accounting policies

Summary of significant accounting policies

2)    Summary of significant accounting policies

Basis of presentation

These interim 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 intercompany transactions are eliminated on consolidation. For variable interest entities (“VIEs”) where Trilogy is not the primary beneficiary, we use the equity method of accounting.

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

The unaudited interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position as of February 28, 2021 and our results of operations and cash flows for the three months ended February 28, 2021 and February 29, 2020. The results of operations for the three months ended February 28, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2021.

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, 2020, filed with the U.S. Securities and Exchange Commission (“SEC”) and Canadian securities regulatory authorities on February 12, 2021.

These interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on April 6, 2021.

XML

Accounts receivable

3 Months Ended

Feb. 28, 2021

Accounts receivable

Accounts receivable

3)    Accounts receivable

	in thousands of dollars
	February 28, 2021	November 30, 2020
	$	$
GST input tax credits	23	15
Ambler Metals LLC	1	114
Accounts receivable	24	129

The balance due from Ambler Metals LLC (see note 4 below) consists of services rendered by Trilogy and reimbursements for invoices paid by Trilogy on behalf of Ambler Metals LLC per a service agreement. The balance was paid in full by Ambler Metals LLC subsequent to the quarter end.

XML

Equity method investment

3 Months Ended

Feb. 28, 2021

Equity method investment

Equity method investment

4)    Equity method investment

(a) Formation of Ambler Metals LLC

On February 11, 2020, the Company completed the formation of a 50/50 joint venture named Ambler Metals LLC with South32 Limited (“South32”). As part of the formation of the joint venture, Trilogy contributed all its assets associated with the UKMP, including the Arctic and Bornite Projects, while South32 contributed US$145 million, resulting in each

party’s subsidiaries directly owning a 50% interest in Ambler Metals LLC. To assist Ambler Metals during the initial set up phase, Trilogy was paying all of Ambler Metals LLC’s invoices and being reimbursed pursuant to a services agreement (the “Services Agreement”) between Trilogy and Ambler Metals LLC until the back office was fully transitioned to a new permanent team employed by the joint venture. The Services Agreement ended on December 31, 2020.

Ambler Metals LLC is an independently operated company jointly controlled by Trilogy and South32 through a four-member board, of which two members are appointed by Trilogy based on its 50% equity interest. All significant decisions related to the UKMP require the approval of both companies. We determined that Ambler Metals LLC is a VIE because it is expected to need additional funding from its owners for its significant activities. However, we concluded that we are not the primary beneficiary of Ambler Metals LLC as the power to direct its activities, through its board, is shared under the Ambler Metals LLC limited liability company agreement. As we have significant influence over Ambler Metals LLC through our representation on its board, we use the equity method of accounting for our investment in Ambler Metals LLC. Our investment in Ambler Metals LLC was initially measured at its fair value of $176 million upon recognition. Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals LLC, which, as at February 28, 2021, totaled $172 million. The following table summarizes the gain on recognition of the UKMP assets upon transfer to the Ambler Metals LLC joint venture on February 11, 2020.

	in thousands of dollars
	$
Fair value ascribed to Ambler Metals LLC interest	176,000
Less: carrying value of contributed /eliminated assets
Mineral properties	(30,631)
Property, plant and equipment	(618)
Elimination of Fairbanks warehouse right of use asset	(93)
Elimination of prepaid State of Alaska mining claim fees	(303)
Add:
Reimbursement of claims staking	44
Demobilization costs of drills	278
Cancellation of Fairbanks warehouse lease liability	93
Fair value of mineral properties purchase option	31,000
Gain on derecognition	175,770

No additional mineral properties expenses were incurred subsequent to February 11, 2020 as upon the formation of the joint venture with South 32, all mineral properties previously held by the Company were contributed to Ambler Metals LLC. Prior to the formation of the joint venture, the Company had also incurred $0.7 million in Arctic Project feasibility costs that are included in the mineral properties expense balance of $1.5 million for the three-month period ended February 29, 2020.

(b) Carrying value of equity method investment

During the three-month period ending February 28, 2021, Trilogy recognized, based on its 50% ownership interest in Ambler Metals LLC, an equity loss equivalent to its pro rata share of Ambler Metals LLC's comprehensive loss of $2.2 million for the three month period ending February 28, 2021. The carrying value of Trilogy’s 50% investment in Ambler Metals LLC as at February 28, 2021 is summarized on the following table.

	in thousands of dollars
	$
November 30, 2020, investment in Ambler Metals LLC.	173,145
Share of loss on equity investment for the three month period ending February 28, 2021	(1,120)
February 28, 2021, investment in Ambler Metals LLC.	172,025

(c) The following table summarizes Ambler Metals LLC's Balance Sheet as at February 28, 2021.

	in thousands of dollars
	February 28, 2021	November 30, 2020
	$	$
Current assets: Cash, deposits and prepaid expenses	79,576	82,226
Non - current assets: Property, equipment and mineral properties	32,038	31,287
Loan receivable from South32	58,747	58,478
Current liabilities: Accounts payable and accrued liabilities	(1,310)	(1,445)
Non - current liabilities: Lease obligation	(795)	(51)
Net assets	168,256	170,495

(d) The following table summarizes Ambler Metals LLC's comprehensive loss for the three-month period ending February 28, 2021.

	in thousands of dollars
	Period ending	Period ending
	February 28, 2021	February 29, 2020
	$	$
Amortization	16	12
Mineral properties expense	1,400	167
General and administrative expense	1,095	219
Interest income	(272)	(43)
Comprehensive loss	2,239	355

(e) Related party transactions - services agreement income

The Company charged $22,151 of expenses related to technical services, including geological, engineering, environmental and human resources, and accounting services in connection with the Services Agreement. In addition, the Company received payments of $4,053 related to operating expenses paid on behalf of Ambler Metals during the three-month period ending February 28, 2021.

XML

Fixed assets

3 Months Ended

Feb. 28, 2021

Fixed assets

Fixed assets

5)    Fixed assets

	in thousands of dollars
	February 28, 2021
		Accumulated
	Cost	amortization	Net
	$	$	$
British Columbia, Canada
Furniture and equipment	63	(45)	18
Leasehold improvements	253	(82)	171
Computer hardware and software	115	(115)	—
	431	(242)	189

	in thousands of dollars
	November 30, 2020
		Accumulated
	Cost	amortization	Net
	$	$	$
British Columbia, Canada
Furniture and equipment	63	(41)	22
Leasehold improvements	253	(69)	184
Computer hardware and software	115	(115)	—
	431	(225)	206

XML

Accounts payable and accrued liabilities

3 Months Ended

Feb. 28, 2021

Accounts payable and accrued liabilities.

Accounts payable and accrued liabilities

6)    Accounts payable and accrued liabilities

		in thousands of dollars
	February 28, 2021	November 30, 2020
	$	$
Trade accounts payable	275	226
Accrued liabilities	166	198
Accrued salaries and vacation	110	464
Accounts payable and accrued liabilities	551	888

XML

Leases

3 Months Ended

Feb. 28, 2021

Leases

Leases

7)    Leases

(a) Right-of-use asset

	in thousands of dollars
	$
ASC transition as at December 1, 2019	681
Amortization	(162)
Lease accretion	50
Derecognition of Fairbanks warehouse lease	(93)
Balance as at November 30, 2020	476
Amortization	(38)
Lease accretion	10
Balance as at February 28, 2021	448

(b) Lease liabilities

The Company’s lease arrangements primarily consist of an operating lease for our office space ending in June 2024. There are no extension options.

Total lease expense recorded within general and administrative expenses was comprised of the following components:

	in thousands of dollars
	Three months ended	Three months ended
	February 28, 2021	February 29, 2020
	$	$
Operating lease costs	38	50
Variable lease costs	35	34
Total lease expense	73	84

Variable lease costs consist primarily of the Company’s portion of operating costs associated with the office space lease as the Company elected to apply the practical expedient not to separate lease and non-lease components.

As of February, 28, 2021, the weighted-average remaining lease term was 3.3 years and the weighted-average discount rate is 8%. Significant judgment was used in the determination of the incremental borrowing rate which included estimating the Company’s credit rating.

Supplemental cash and non-cash information relating to our leases during the three months ended February 28, 2021 are as follows:

● Cash paid for amounts included in the measurement of lease liabilities was $48,830.

Future minimum payments relating to the lease recognized in our balance sheet as of February 28, 2021 are as follows:

	in thousands of dollars
	February 28, 2021
Fiscal year	$
2021	151
2022	206
2023	212
2024	126
Total undiscounted lease payments	695
Effect of discounting	(155)
Present value of lease payments recognized as lease liability	540

XML

Share capital

3 Months Ended

Feb. 28, 2021

Share capital.

Share capital

8)    Share capital

Authorized:

unlimited common shares, no par value

	in thousands of dollars, except share amounts
	Number of shares	Ascribed value
		$
November 30, 2019	140,427,761	177,971
Exercise of options	3,297,588	1,133
Restricted Share Units	412,501	642
November 30, 2020	144,137,850	179,746
Exercise of options	76,635	334
February 28, 2021, issued and outstanding	144,214,485	180,080

(a) Stock options

During the three-month period ended February 28, 2021, the Company granted 3,374,150 options (2020 - 2,050,000 options) at a weighted-average exercise price of CAD$2.52 (2020 - CAD$3.02) to employees, consultants and directors exercisable for a period of five years with various vesting terms from immediate vesting to vesting over a two-year period. The weighted-average fair value attributable to options granted in the period was $0.84 (2020 - $0.99).

For the three-month period ended February 28, 2021, Trilogy recognized a stock-based compensation charge of $2.10 million (2019 – $1.16 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

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

Assumptions used in the pricing model for the three-month period ended February 28, 2021 are as provided below.

	February 28, 2021
Risk-free interest rates	0.31%
Exercise price	CAD$2.52
Expected life	3 years
Expected volatility	64.4%
Expected dividends	Nil

As of February 28, 2021, there were 3,374,150 non-vested options outstanding with a weighted average exercise price of $2.07; the non-vested stock option expense not yet recognized was $1.63 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 three-month period ended February 28, 2021 is as follows:

	February 28, 2021
		Weighted average
		exercise price
	Number of options	$
Balance – beginning of the period	8,647,500	1.88
Granted	3,374,150	1.98
Exercised	(381,373)	1.97
Cancelled	(120,000)	2.42
Balance – end of the period	11,520,277	1.90

The following table summarizes information about the stock options outstanding at February 28, 2021.

	Outstanding			Exercisable		Unvested
			Weighted		Weighted
	Number of	Weighted	average	Number of	average	Number of
	outstanding	average years	exercise price	exercisable	exercise price	unvested
Range of price	options	to expiry	$	options	$	options
$0.55 to $1.00	1,705,627	1.34	0.69	1,705,627	0.69	—
$1.01 to $1.50	75,000	1.81	1.15	75,000	1.15	—
$1.51 to $2.00	4,277,150	4.54	1.95	2,779,483	1.94	1,497,667
$2.01 to $2.50	5,425,000	3.72	2.24	3,618,330	2.28	1,806,670
$2.51 to $3.00	37,500	3.23	2.68	37,500	2.68	—
	11,520,277	3.66	1.90	8,215,940	1.82	3,304,337

The aggregate intrinsic value of vested share options (the market value less the exercise price) at February 28, 2021 was $3.3 million (2020 - $5.9 million) and the aggregate intrinsic value of exercised options for the three months ended February 28, 2021 was $0.17 million (2020 - $0.04 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 three-month period ended February 28, 2021 is as follows:

	Number of DSUs
Balance – beginning of the period	1,218,520
Granted	19,992
Balance – end of the period	1,238,512

For the three-month period ended February 28, 2021, Trilogy recognized a stock-based compensation charge of $0.04 million (2020- $0.04 million), net of estimated forfeitures.  The Company did not issue any RSU grants during the three-month period ended February 28, 2021. As of February 28, 2021, there were no outstanding RSU grants.

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Financial instruments

3 Months Ended

Feb. 28, 2021

Financial instruments

Financial instruments

9)    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.

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 February 28, 2021 is limited to the Canadian dollar balances consisting of cash of approximately CDN$78,000, accounts receivable of approximately CDN$29,000 and accounts payable of approximately CDN$413,000. 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 $24,000.

(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 February 28, 2021 are as follows:

	in thousands of dollars
	Total	< 1 Year	1–2 Years	2–5 Years	Thereafter
	$	$	$	$	$
Accounts payable and accrued liabilities	551	551	—	—	—
Office lease	694	201	421	72	—
	1,245	752	421	72	—

(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 February 28, 2021, a 1% change in interest rates would result in a $200 change in net loss, assuming all other variables remain constant.

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Commitment

3 Months Ended

Feb. 28, 2021

Commitment

Commitment

10)    Commitment

The Company has commitments with respect to an office lease requiring future minimum lease payments as summarized in note 7(b) above.

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Summary of significant accounting policies (Policies)

3 Months Ended

Feb. 28, 2021

Summary of significant accounting policies

Basis of presentation

Basis of presentation

These interim 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 intercompany transactions are eliminated on consolidation. For variable interest entities (“VIEs”) where Trilogy is not the primary beneficiary, we use the equity method of accounting.

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

The unaudited interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position as of February 28, 2021 and our results of operations and cash flows for the three months ended February 28, 2021 and February 29, 2020. The results of operations for the three months ended February 28, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2021.

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, 2020, filed with the U.S. Securities and Exchange Commission (“SEC”) and Canadian securities regulatory authorities on February 12, 2021.

These interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on April 6, 2021.

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Accounts receivable (Tables)

3 Months Ended

Feb. 28, 2021

Accounts receivable

Schedule of account receivable

	in thousands of dollars
	February 28, 2021	November 30, 2020
	$	$
GST input tax credits	23	15
Ambler Metals LLC	1	114
Accounts receivable	24	129

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Equity method investment (Tables)

3 Months Ended

Feb. 28, 2021

Equity method investment

Schedule of gain on transfer of assets

	in thousands of dollars
	$
Fair value ascribed to Ambler Metals LLC interest	176,000
Less: carrying value of contributed /eliminated assets
Mineral properties	(30,631)
Property, plant and equipment	(618)
Elimination of Fairbanks warehouse right of use asset	(93)
Elimination of prepaid State of Alaska mining claim fees	(303)
Add:
Reimbursement of claims staking	44
Demobilization costs of drills	278
Cancellation of Fairbanks warehouse lease liability	93
Fair value of mineral properties purchase option	31,000
Gain on derecognition	175,770

Schedule of equity investment

	in thousands of dollars
	$
November 30, 2020, investment in Ambler Metals LLC.	173,145
Share of loss on equity investment for the three month period ending February 28, 2021	(1,120)
February 28, 2021, investment in Ambler Metals LLC.	172,025

Schedule of Ambler Metals LLC's Balance Sheet

	in thousands of dollars
	February 28, 2021	November 30, 2020
	$	$
Current assets: Cash, deposits and prepaid expenses	79,576	82,226
Non - current assets: Property, equipment and mineral properties	32,038	31,287
Loan receivable from South32	58,747	58,478
Current liabilities: Accounts payable and accrued liabilities	(1,310)	(1,445)
Non - current liabilities: Lease obligation	(795)	(51)
Net assets	168,256	170,495

Schedule of Ambler Metals LLC's comprehensive loss

	in thousands of dollars
	Period ending	Period ending
	February 28, 2021	February 29, 2020
	$	$
Amortization	16	12
Mineral properties expense	1,400	167
General and administrative expense	1,095	219
Interest income	(272)	(43)
Comprehensive loss	2,239	355

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Fixed assets (Tables)

3 Months Ended

Feb. 28, 2021

Fixed assets

Schedule of Fixed assets

	in thousands of dollars
	February 28, 2021
		Accumulated
	Cost	amortization	Net
	$	$	$
British Columbia, Canada
Furniture and equipment	63	(45)	18
Leasehold improvements	253	(82)	171
Computer hardware and software	115	(115)	—
	431	(242)	189

	in thousands of dollars
	November 30, 2020
		Accumulated
	Cost	amortization	Net
	$	$	$
British Columbia, Canada
Furniture and equipment	63	(41)	22
Leasehold improvements	253	(69)	184
Computer hardware and software	115	(115)	—
	431	(225)	206

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Accounts payable and accrued liabilities (Tables)

3 Months Ended

Feb. 28, 2021

Accounts payable and accrued liabilities.

Schedule of accounts payable and accrued liabilities

		in thousands of dollars
	February 28, 2021	November 30, 2020
	$	$
Trade accounts payable	275	226
Accrued liabilities	166	198
Accrued salaries and vacation	110	464
Accounts payable and accrued liabilities	551	888

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Leases (Tables)

3 Months Ended

Feb. 28, 2021

Leases

Schedule of right-of-use asset

	in thousands of dollars
	$
ASC transition as at December 1, 2019	681
Amortization	(162)
Lease accretion	50
Derecognition of Fairbanks warehouse lease	(93)
Balance as at November 30, 2020	476
Amortization	(38)
Lease accretion	10
Balance as at February 28, 2021	448

Schedule of lease expenses

	in thousands of dollars
	Three months ended	Three months ended
	February 28, 2021	February 29, 2020
	$	$
Operating lease costs	38	50
Variable lease costs	35	34
Total lease expense	73	84

Schedule of future minimum payments

	in thousands of dollars
	February 28, 2021
Fiscal year	$
2021	151
2022	206
2023	212
2024	126
Total undiscounted lease payments	695
Effect of discounting	(155)
Present value of lease payments recognized as lease liability	540

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Share capital (Tables)

3 Months Ended

Feb. 28, 2021

Share capital.

Schedule of common stock outstanding roll forward

	in thousands of dollars, except share amounts
	Number of shares	Ascribed value
		$
November 30, 2019	140,427,761	177,971
Exercise of options	3,297,588	1,133
Restricted Share Units	412,501	642
November 30, 2020	144,137,850	179,746
Exercise of options	76,635	334
February 28, 2021, issued and outstanding	144,214,485	180,080

Schedule of assumptions used in the pricing model

	February 28, 2021
Risk-free interest rates	0.31%
Exercise price	CAD$2.52
Expected life	3 years
Expected volatility	64.4%
Expected dividends	Nil

Summary of the company's stock option plan

	February 28, 2021
		Weighted average
		exercise price
	Number of options	$
Balance – beginning of the period	8,647,500	1.88
Granted	3,374,150	1.98
Exercised	(381,373)	1.97
Cancelled	(120,000)	2.42
Balance – end of the period	11,520,277	1.90

Summary of information about stock options

	Outstanding			Exercisable		Unvested
			Weighted		Weighted
	Number of	Weighted	average	Number of	average	Number of
	outstanding	average years	exercise price	exercisable	exercise price	unvested
Range of price	options	to expiry	$	options	$	options
$0.55 to $1.00	1,705,627	1.34	0.69	1,705,627	0.69	—
$1.01 to $1.50	75,000	1.81	1.15	75,000	1.15	—
$1.51 to $2.00	4,277,150	4.54	1.95	2,779,483	1.94	1,497,667
$2.01 to $2.50	5,425,000	3.72	2.24	3,618,330	2.28	1,806,670
$2.51 to $3.00	37,500	3.23	2.68	37,500	2.68	—
	11,520,277	3.66	1.90	8,215,940	1.82	3,304,337

Schedule of restricted share Units and deferred share units plans

	Number of DSUs
Balance – beginning of the period	1,218,520
Granted	19,992
Balance – end of the period	1,238,512

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Financial instruments (Tables)

3 Months Ended

Feb. 28, 2021

Financial instruments

Schedule of contractually obligated cash flow requirements

	in thousands of dollars
	Total	< 1 Year	1–2 Years	2–5 Years	Thereafter
	$	$	$	$	$
Accounts payable and accrued liabilities	551	551	—	—	—
Office lease	694	201	421	72	—
	1,245	752	421	72	—

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Accounts receivable (Details) - USD ($) $ in Thousands	Feb. 28, 2021	Nov. 30, 2020
Accounts receivable
GST input tax credits	$ 23	$ 15
Ambler Metals LLC	1	114
Accounts receivable	$ 24	$ 129

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Equity method investment - Narrative (Details) - USD ($)		3 Months Ended
	Feb. 11, 2020	Feb. 28, 2021	Feb. 29, 2020	Nov. 30, 2020
Schedule of Equity Method Investments [Line Items]
Comprehensive loss		$ (4,516,000)	$ 171,179,000
Loss on equity investment in Ambler Metals LLC (note 4(b))		1,120,000	178,000
Mineral property expense			1,545,000
Service agreement
Related party transactions - services agreement income
Amount charged for expenses		$ 22,151
Ambler Metals LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership	50.00%	50.00%
Comprehensive loss		$ 2,200,000
Fair value ascribed to Ambler Metals LLC interest	$ 176,000,000			$ 173,145,000
Loss on equity investment in Ambler Metals LLC (note 4(b))		1,120,000
Related party transactions - services agreement income
Amount charged for expenses		$ 4,053
Upper Kobuk Mineral Projects | South32
Schedule of Equity Method Investments [Line Items]
Percentage of ownership	50.00%
Upper Kobuk Mineral Projects | South32 | Ambler Metals LLC
Schedule of Equity Method Investments [Line Items]
Equity method investment contribution	$ 145,000,000
Arctic Project
Schedule of Equity Method Investments [Line Items]
Feasibility costs			$ 700,000

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Equity method investment - Gain on recognition of the UKMP assets upon transfer to the Ambler Metals LLC joint venture (Details) - USD ($) $ in Thousands	Feb. 28, 2021	Nov. 30, 2020	Feb. 11, 2020
Less: carrying value of contributed /eliminated assets
Property, plant and equipment	$ 189
Ambler Metals LLC
Table summarizes the gain on recognition of the UKMP assets upon transfer to the Ambler Metals joint venture
Fair value ascribed to Ambler Metals LLC interest		$ 173,145	$ 176,000
Less: carrying value of contributed /eliminated assets
Mineral properties			(30,631)
Property, plant and equipment			(618)
Elimination of Fairbanks warehouse right of use asset			(93)
Elimination of prepaid State of Alaska mining claim fees			(303)
Add:
Reimbursement of claims staking			44
Demobilization costs of drills			278
Cancellation of Fairbanks warehouse lease liability			93
Fair value of mineral properties purchase option			31,000
Gain on derecognition			$ 175,770

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Equity method investment - Financial information (Details) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020	Nov. 30, 2020	Feb. 11, 2020
The carrying value of Trilogy's 50% investment in Ambler Metals LLC
Share of loss on equity investment for the three month period ending February 28, 2021	$ (1,120)	$ (178)
February 28, 2021, investment in Ambler Metals LLC.	172,025		$ 173,145
Ambler Metals LLC's Balance Sheet and Comprehensive loss
Total Assets	182,534		185,265
Amortization	17	42
General and administrative expense	401	651
Ambler Metals LLC
The carrying value of Trilogy's 50% investment in Ambler Metals LLC
November 30, 2020, investment in Ambler Metals LLC.			173,145	$ 176,000
Share of loss on equity investment for the three month period ending February 28, 2021	(1,120)
February 28, 2021, investment in Ambler Metals LLC.	172,025			$ 176,000
Ambler Metals LLC's Balance Sheet and Comprehensive loss
Current assets: Cash, deposits and prepaid expenses	79,576		82,226
Non - current assets: Property, equipment and mineral properties	32,038		31,287
Loan receivable from South32	58,747		58,478
Current liabilities: Accounts payable and accrued liabilities	(1,310)		(1,445)
Non - current liabilities: Lease obligation	(795)		(51)
Total Assets	168,256		$ 170,495
Amortization	16	12
Mineral properties expense	1,400	167
General and administrative expense	1,095	219
Interest income	272	43
Comprehensive loss	$ (2,239)	$ (355)

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Fixed assets (Details) - USD ($) $ in Thousands	Feb. 28, 2021	Nov. 30, 2020
Property, Plant and Equipment [Line Items]
Cost	$ 431	$ 431
Accumulated amortization	(242)	(225)
Assets derecognized note 4(a)	189
Net	189	206
Furniture and equipment | British Columbia, Canada
Property, Plant and Equipment [Line Items]
Cost	63	63
Accumulated amortization	(45)	(41)
Assets derecognized note 4(a)	18
Net		22
Leasehold improvements | British Columbia, Canada
Property, Plant and Equipment [Line Items]
Cost	253	253
Accumulated amortization	(82)	(69)
Assets derecognized note 4(a)	171
Net		184
Computer hardware and software | British Columbia, Canada
Property, Plant and Equipment [Line Items]
Cost	115	115
Accumulated amortization	$ (115)	$ (115)

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Accounts payable and accrued liabilities (Details) - USD ($) $ in Thousands	Feb. 28, 2021	Nov. 30, 2020
Accounts payable and accrued liabilities.
Trade accounts payable	$ 275	$ 226
Accrued liabilities	166	198
Accrued salaries and vacation	110	464
Accounts payable and accrued liabilities	$ 551	$ 888

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Leases - Narrative (Details) - USD ($)	3 Months Ended	12 Months Ended
	Feb. 28, 2021	Nov. 30, 2020	Nov. 30, 2019
Leases
Right-of-use asset	$ 448,000	$ 476,000	$ 681,000
Weighted-average remaining lease term	3 years 3 months 18 days
Weighted-average discount rate	8.00%
Cash paid for amounts included in the measurement of lease liabilities	$ 48,830
Derecognition of right of use asset		$ 93,000

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Leases - Right of use asset (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Feb. 28, 2021	Nov. 30, 2020
Leases
Balance, beginning	$ 476	$ 681
Amortization	(38)	(162)
Lease accretion	10	50
Derecognition of Fairbanks warehouse lease		(93)
Balance, ending	$ 448	$ 476

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Leases - Lease liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Lessee, Lease, Description [Line Items]
Operating lease costs	$ 38	$ 50
Variable lease costs	35	34
Total lease expense	$ 73	$ 84
Office Space
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Existence of Option to Extend [true false]	false

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Leases - Future minimum payments (Details) $ in Thousands	Feb. 28, 2021 USD ($)
Future minimum payments
2021	$ 151
2022	206
2023	212
2024	126
Total undiscounted lease payments	695
Effect of discounting	(155)
Present value of lease payments recognized as lease liability	$ 540

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Share capital - Narrative (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Feb. 28, 2021 USD ($) $ / shares shares	Feb. 28, 2021 USD ($) $ / shares $ / shares shares	Feb. 29, 2020 USD ($) $ / shares shares	Feb. 29, 2020 USD ($) $ / shares	Nov. 30, 2020 shares	Nov. 30, 2019 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares, conversion | shares	1
Stock-based compensation | $	$ (2,148)		$ (1,196)
Non-vested stock options outstanding | shares	11,520,277	11,520,277
Weighted average exercise price options outstanding | $ / shares	$ 1.90	$ 1.90
Aggregate intrinsic value, vested options | $	$ 3,300	$ 3,300	5,900	$ 5,900
Aggregate intrinsic value, options exercised | $	$ 170		40
Share capital
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock committed for issuance | shares	144,214,485	144,214,485			144,137,850	140,427,761
Nonvested Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested stock options outstanding | shares	3,374,150	3,374,150
Weighted average exercise price options outstanding | $ / shares	$ 2.07	$ 2.07
Stock option expense not yet recognized | $	$ 1,630	$ 1,630
Period for recognition of stock compensation expense	2 years
NovaGold DSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted units | shares	19,992
Stock Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation | $	$ 40		$ 40
Employees, Consultants And Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options granted, expiration period	5 years
Stock options granted | shares	3,374,150		2,050,000
Vesting period			2 years
Weighted-average exercise price | $ / shares		$ 2.52		$ 3.02
Stock options granted, weighted average fair value | $ / shares	$ 0.84		$ 0.99
Directors Employees And Services Providers
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation | $	$ 2,100		$ 1,160

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Share capital - Common shares issued and outstanding (Details) - Share capital - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Feb. 28, 2021	Nov. 30, 2020
Beginning balance, Number of shares	144,137,850	140,427,761
Beginning balance, Ascribed value	$ 179,746	$ 177,971
Exercise of options, Number of shares	76,635	3,297,588
Exercise of options, Ascribed value	$ 334	$ 1,133
Restricted share units, Number of shares		412,501
Restricted share units, Ascribed value		$ 642
Ending balance, Number of shares	144,214,485	144,137,850
Ending balance, Ascribed value	$ 180,080	$ 179,746

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Share capital - Assumptions used in the pricing model (Details)	3 Months Ended
	Feb. 28, 2021 $ / shares
Share capital.
Risk-free interest rates	0.31%
Exercise price	$ 2.52
Expected life	3 years
Expected volatility	64.40%
Expected dividends

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Share capital - Stock options plans and changes (Details)	3 Months Ended
	Feb. 28, 2021 $ / shares shares
Balance - end of year, number of options | shares	11,520,277
Balance - end of year, weighted average exercise price | $ / shares	$ 1.90
Stock option
Balance - beginning of the year, number of options | shares	8,647,500
Balance - beginning of the year, weighted average exercise price | $ / shares	$ 1.88
Number of options, Granted | shares	3,374,150
Weighted average exercise price, Granted | $ / shares	$ 1.98
Number of options, Exercised | shares	(381,373)
Weighted average exercise price, Exercised | $ / shares	$ 1.97
Number of options, Cancelled | shares	(120,000)
Weighted average exercise price, Cancelled | $ / shares	$ 2.42
Balance - end of year, number of options | shares	11,520,277
Balance - end of year, weighted average exercise price | $ / shares	$ 1.90

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Share capital - Stock options outstanding (Details)	3 Months Ended
	Feb. 28, 2021 $ / shares shares
Number of outstanding options | shares	11,520,277
Weighted average years to expiry	3 years 7 months 28 days
Weighted average exercise price options outstanding	$ 1.90
Number of exercisable options | shares	8,215,940
Weighted average exercise price exercisable	$ 1.82
Number of unvested options | shares	3,304,337
Range 1
Exercise price lower range limit	$ 0.55
Exercise price upper range limit	$ 1.00
Number of outstanding options | shares	1,705,627
Weighted average years to expiry	1 year 4 months 2 days
Weighted average exercise price options outstanding	$ 0.69
Number of exercisable options | shares	1,705,627
Weighted average exercise price exercisable	$ 0.69
Number of unvested options | shares	0
Range 2
Exercise price lower range limit	$ 1.01
Exercise price upper range limit	$ 1.50
Number of outstanding options | shares	75,000
Weighted average years to expiry	1 year 9 months 21 days
Weighted average exercise price options outstanding	$ 1.15
Number of exercisable options | shares	75,000
Weighted average exercise price exercisable	$ 1.15
Number of unvested options | shares	0
Range 3
Exercise price lower range limit	$ 1.51
Exercise price upper range limit	$ 2.00
Number of outstanding options | shares	4,277,150
Weighted average years to expiry	4 years 6 months 14 days
Weighted average exercise price options outstanding	$ 1.95
Number of exercisable options | shares	2,779,483
Weighted average exercise price exercisable	$ 1.94
Number of unvested options | shares	1,497,667
Range 4
Exercise price lower range limit	$ 2.01
Exercise price upper range limit	$ 2.50
Number of outstanding options | shares	5,425,000
Weighted average years to expiry	3 years 8 months 19 days
Weighted average exercise price options outstanding	$ 2.24
Number of exercisable options | shares	3,618,330
Weighted average exercise price exercisable	$ 2.28
Number of unvested options | shares	1,806,670
Range 5
Exercise price lower range limit	$ 2.51
Exercise price upper range limit	$ 3.00
Number of outstanding options | shares	37,500
Weighted average years to expiry	3 years 2 months 23 days
Weighted average exercise price options outstanding	$ 2.68
Number of exercisable options | shares	37,500
Weighted average exercise price exercisable	$ 2.68
Number of unvested options | shares	0

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Share capital - Stock units plans and changes (Details)	3 Months Ended
	Feb. 28, 2021 shares
Number of RSU's
Balance - end of year	0
NovaGold DSUs
Balance - beginning of the period	1,218,520
Granted	19,992
Balance - end of period	1,238,512

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Financial instruments - Narrative (Details)	3 Months Ended
	Feb. 28, 2021 USD ($)	Feb. 28, 2021 CAD ($)	Nov. 30, 2020 USD ($)
Accounts receivable	$ 24,000		$ 129,000
Change in interest rate	1.00%	1.00%
Currency risk
Cash		$ 78,000
Accounts receivable		29,000
Accounts payable		$ 413,000
Change in foreign exchange rate	10.00%	10.00%
Foreign exchange (gain) loss	$ 24,000

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Financial instruments - Contractually obligated cash flow requirements (Details) $ in Thousands	Feb. 28, 2021 USD ($)
Total	$ 1,245
Within 1 Year	752
1 - 2 Years	421
2 - 5 Years	72
Thereafter	0
Accounts payable and accrued liabilities
Total	551
Within 1 Year	551
1 - 2 Years	0
2 - 5 Years	0
Thereafter	0
Office lease
Total	694
Within 1 Year	201
1 - 2 Years	421
2 - 5 Years	72
Thereafter	$ 0