Investment in Ambler Metals LLC

3 Months Ended

Feb. 28, 2025

Investment in Ambler Metals LLC

Investment in Ambler Metals LLC

3)    Investment in Ambler Metals LLC

(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 (“Ambler Metals”) 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 cash of $145.0 million, resulting in each party’s subsidiaries directly owning a 50% interest in Ambler Metals.

Ambler Metals is a 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 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 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 through our representation on its board, we use the equity method of accounting for our investment in Ambler Metals. 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, 2025, totaled $106.9 million (2024 - $134.0 million).

(b) Carrying value of equity method investment

Trilogy recognized, based on its 50% ownership interest in Ambler Metals, an equity loss equivalent to its pro rata share of Ambler Metals’ comprehensive loss of $1.2 million for the three-month period ending February 28, 2025 (2024 - $1.6

million). The carrying value of Trilogy’s 50% investment in Ambler Metals as at February 28, 2025 is summarized on the following table.

	in thousands of dollars
		$
November 30, 2024, Investment in Ambler Metals		107,497
Share of loss on equity investment for the three month period ending February 28, 2025		(581)
February 28, 2025, Investment in Ambler Metals		106,916

(c) The following table summarizes Ambler Metals’ Balance Sheet on a 100% basis as at February 28, 2025.

	in thousands of dollars
	February 28, 2025	November 30, 2024
	$	$
Total assets	38,688	39,961
Cash and cash equivalents	6,504	7,472
Mineral properties	30,899	30,899
Total liabilities	(651)	(761)
Accounts payable and accrued liabilities	(494)	(559)
Members' equity (total assets less total liabilities)	38,037	39,200

Ambler Metals’ cash and cash equivalents are held at one bank of which the majority is uninsured as at February 28, 2025.  

(d) The following table summarizes Ambler Metals' loss for the three-month and three-month periods ended February 28, 2025 and February 29, 2024.

			in thousands of dollars
	For the three months ended
		February 28, 2025	February 29, 2024
		$	$
Depreciation		32	38
Corporate salaries and wages		35	234
General and administrative		99	127
Mineral property expense		747	1,094
Professional fees		312	177
Foreign exchange (gain)/loss		—	2
Interest and other income		(63)	(87)
Comprehensive loss		1,162	1,585

(e) Related party transactions

During the three-month period ended February 28, 2025, the Company charged $8,000 (2024 - $10,000) related to administrative and accounting services in connection with a service agreement between the Company and Ambler Metals. In addition, the Company received payments of $38,000 (2024 - $16,000) related to operating expenses paid on behalf of Ambler Metals pursuant to the service agreement.