South32 acquires stakes in Trilogy Metals

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By Ted Liu

Trilogy Metals Inc. (TSX/NYSE American: TMQ) announced that South32 Limited (ASX/JSE/LSE: S32) has become a new significant shareholder, owning approximately 6.5 million common shares or approximately 6% of the outstanding common shares. Rick Van Nieuwenhuyse, Trilogy Metals’ CEO, has also increased his shareholdings of Trilogy Metals by approximately 1.7 million shares, owning approximately 2.8 million common shares or approximately 2.6%.

South32 and Van Nieuwenhuyse purchased shares from an unnamed previous shareholder.

As of March 20, 2017, Trilogy Metals’ principal shareholders included Electrum Strategic Opportunities Fund (22,587,873 shares or 21.4%), Paulson & Co. Inc. (11,603,178 shares or 11.0%), The Baupost Group, L.L.C. (10,600,758 shares or 10.0%), Resource Capital Fund VI L.P. (10,353,300 shares or 9.8%), and Gold First Investments Ltd. (5,568,000 shares or 5.3%). Resource Capital Fund VI has since reduced its holding to 7,659,096 shares as of November 30, 2017.

Concurrently, Trilogy Metals has given South32 participation rights in future financings to participate at a minimum of 20% to a maximum of 40% in future financings, private or public, to a maximum ownership of 19.9% in the Company. This right expires if South32 does not participate for the lesser of 20%, or that number of shares that would not put them past a 19.9% ownership interest in the company, in any particular financing.

“We are excited to have South32 as a significant shareholder and joining our other large shareholders: Electrum, Paulson and Baupost. Together with our strong supportive shareholders the Company expects to advance development of the Arctic and Bornite projects in the Ambler mining district. It is an exciting time to be a Trilogy shareholder and I am pleased to personally be ALL-IN on Ambler!”, commented Nieuwenhuyse, President and CEO of Trilogy Metals.

Trilogy Metals Inc. is a metals exploration company focused on exploring and developing the Ambler mining district located in northwestern Alaska. It is one of the richest and most-prospective known copper-dominant districts located in one of the safest geopolitical jurisdictions in the world. It hosts world-class polymetallic VMS deposits that contain copper, zinc, lead, gold and silver, and carbonate replacement deposits which have been found to host high grade copper mineralization. Exploration efforts have been focused on two deposits in the Ambler mining district – the Arctic VMS deposit and the Bornite carbonate replacement deposit. Both deposits are located within the Company’s land package that spans approximately 143,000 hectares.

Trilogy Metals has an agreement with NANA Regional Corporation, Inc., a Regional Alaska Native Corporation that provides a framework for the exploration and potential development of the Ambler mining district in cooperation with local communities.

On April 10, 2017, Trilogy through NovaCopper US Inc. entered into an agreement with South32 USA Exploration Inc. that grants to South32 a three-year option to form a 50/50 joint venture with respect to Trilogy’s Upper Kobuk Mineral Projects.

South32 must contribute a minimum of US$10 million each year, for a maximum of three years, to keep the option in good standing. South32 may exercise its option at any time to form the 50/50 joint venture until the option expiration date. In order to exercise its option to form the joint venture, South32 must contribute a minimum of US $150 million, plus (i) any amounts Trilogy spends at the Arctic Project over the next three years up to US $5 million per year, less the amount of the Initial Funding contributed by South32, and (ii) US $5 million if the option is exercised between April 1, 2018 and March 31, 2019 or US $10 million if the option is exercised between April 1, 2019 and the expiration date of the option.

photo credit: Trilogy Metals