Trilogy Metals Announces Strategic Investment by US Federal Government

Executive Summary

• The U.S. Department of War (DOW) will invest approximately $35.6 million in Trilogy Metals and its joint‑venture partner South32 to advance the Upper Kobuk Mineral Projects (UKMP) in Alaska.
• DOW will acquire roughly 10 % of Trilogy Metals through two parallel transactions:
• $17.8 M for 8,215,570 units at $2.17 per unit (each unit = one common share + ¾ of a 10‑year warrant).
• $17.8 M for 8,215,570 South32‑held common shares plus a call option for an additional 6,161,678 shares at $0.01 each.
• The proceeds are earmarked to fund exploration, development, and the construction of the Ambler Access Project (Ambler Road), a 211‑mile industrial road critical to project viability.

Key Details

• Investors: U.S. Department of War (Office of the Undersecretor of Defense for Acquisitions & Sustainment and Office of Strategic Capital), South32 Limited, and Trilogy Metals.
• Investment Structure:
• Trilogy transaction: 8,215,570 units @ $2.17/unit → $17.8 M; each unit = 1 common share + ¾ of a 10‑year warrant (exercisable at $0.01 after Ambler Road completion).
• South32 transaction: $17.8 M for South32’s 8,215,570 Trilogy shares plus a 10‑year call option for 6,161,678 additional shares @ $0.01/share (exercisable post‑Ambler Road).
• Equity Stake: DOW will hold ~10 % of Trilogy Metals after completion.
• Board Rights: DOW may appoint one independent third‑party director to Trilogy’s board for three years.
• Debt Covenant: Trilogy cannot incur indebtedness > $1 billion aggregate without DOW’s written consent until 2029.
• Use of Proceeds: Advance exploration and development of UKMP; support financing and construction of the Ambler Access Project in coordination with Alaska State authorities.
• Closing Conditions: Subject to regulatory, stock‑exchange approvals, re‑authorization of the Defense Production Act, and completion of a FOCI review. If not satisfied by 2026‑03‑31, LOI terminates.
• Strategic Rationale (CEO Quote): “This proposed partnership with the U.S. Government represents a significant milestone… for a secure, domestic supply of critical minerals…”. – Tony Giardini, President & CEO.

Notable Quotes

“The Department of War's interest underscores the strategic importance of the Upper Kobuk Mineral Projects in supporting U.S. energy, technology, and national security priorities.” – Tony Giardini, President and Chief Executive Officer, Trilogy Metals.