- The US Department of War has signed a binding letter of intent to take a 10 per cent stake in Trilogy Metals (TSX/NYSEAM:TMQ), investing $17.8 million to aid in the exploration and development of the company’s Upper Kobuk mineral projects in Alaska
- The projects span a 471,796-acre land package within the Ambler Mining district, one of the world’s top polymetallic copper districts
- Trilogy Metals stock has added 343.94 per cent year-over-year
The US Department of War (DOW) has signed a binding letter of intent to take a 10 per cent stake in Trilogy Metals (TSX/NYSEAM:TMQ), investing $17.8 million to aid in the exploration and development of the company’s Upper Kobuk mineral projects (UKMP) in Alaska. The projects are held by Ambler Metals, a 50/50 joint venture between Trilogy and South32 Limited (ASX:SOUHY), which will also receive a $17.8 million investment.
The UKMP are comprised of a 471,796-acre land package within the Ambler Mining district, which is described in Monday’s news release as “one of the richest and most prospective known copper-dominant districts in the world.” Highlights include the preliminary economic assessment-stage Bornite copper-cobalt carbonate replacement project and the feasibility-stage after-tax US$1.1 billion net present value Arctic project prospective for copper, zinc, lead, gold, and silver.
The US Government will collaborate with the companies to advance permitting, financing and construction on the property, including future mines and the proposed 211-mile Ambler Access Road to facilitate project activities.
The DOW has the right to appoint one independent director to Trilogy’s board for a three-year period.
The deal is contingent on the US Congress reauthorizing the Defense Production Act and the US Government completing its Foreign Ownership, Control or Influence review by March 31, 2026.
Financing details
The DOW will receive 8,215,570 Trilogy units at a price of $2.17, with each unit composed of one Trilogy Metals share and 3/4 of a 10-year warrant. Each warrant is exercisable following the construction of the Ambler Access Road at $0.01 per Trilogy share.
The DOW will pay an equal amount to acquire an equal number of Trilogy shares owned by South32. This is in addition to a 10-year call option to acquire an additional 6,161,678 Trilogy shares, also owned by South32, priced at $0.01 each and exercisable following access road construction. All proceeds are to be reinvested in the joint venture.
As per the letter of intent, Trilogy will not be permitted to incur third-party debt in excess of $1 billion without prior consent from the DOW until January 1, 2029.
Management commentary
“This proposed partnership with the US Government represents a significant milestone for Trilogy Metals and for the development of a secure, domestic supply of critical minerals for America in Alaska. The Department of War’s interest underscores the strategic importance of the Upper Kobuk mineral projects in supporting US energy, technology and national security priorities. We look forward to working with our partners at South32, federal and state agencies, and Alaska Native communities to advance this world-class district responsibly and collaboratively,” Tony Giardini, president and chief executive officer of Trilogy Metals, said in a statement.
About Trilogy Metals
Trilogy Metals is a metal exploration and development company active in Alaska.
Trilogy Metals stock (TSX/NYSEAM:TMQ) last traded at C$2.93. The stock has added 343.94 per cent year-over-year but only 25.41 per cent since 2020.
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