JV Article: Trilogy Notches PFS Milestone on Journey to Develop Ambler Mining District

Trilogy Metals Inc. (TSX/NYSE American: TMQ) has tabled results from a positive pre-feasibility study (PFS) for its polymetallic Arctic deposit, which is part of its larger land holdings in the Ambler Mining District in northwestern Alaska.

A proposed mine at Arctic has an after tax net-present value of US$1.4 billion at an 8% discount rate and an after-tax internal rate of return of 33.4%. A 12-year mine plan calls for US$780 million in initial capital expenditure and US$66 million in sustaining capital. Total all-in cash costs are estimated at US63 ? per lb. of payable copper. At US$3 per lb. copper, payback would take two years.

Arctic contains 36 million indicated tonnes grading 3.07% copper, 0.73% lead, 4.23% zinc, 0.63 gram gold and 47.6 grams silver for 2.4 billion lbs. copper, 581 million lbs. lead, 3.3 million lbs. zinc, 728,000 oz. gold and 55 million oz. silver. That's inclusive of 43 million probable tonnes grading 2.32% copper, 3.24% zinc, 0.57% lead, 0.49 gram gold and 36 grams silver.

The volcanic massive sulfide (VMS) deposit lies 470 km northwest of Fairbanks, Alaska, and located on the side of a mountain beneath 100 to 130 metres of rock.

Rick Van Nieuwenhuyse, President and CEO of Trilogy Metals Inc.

Trilogy Metals President and CEO Rick Van Nieuwenhuyse says that's a very favorable orientation for a VMS style deposit, which more often tend to be at very high angles and better suited to underground mining. In contrast, the Arctic VMS deposit could be mined as an open pit.

Trilogy must first complete 50 million tonnes of pre-stripping resulting in a 3-year construction timeline. In the first year it would build an access road, camp and maintenance route. This would enable Trilogy to start pre-stripping in years two and three, stockpiling 630,000 tonnes of ore and resulting in a six month ramp up to full production by year three.

According to Van Nieuwenhuyse, roughly 40 million tonnes of historic resources have been defined in other parts of the district, along the same VMS trend. These are not National Instrument 43-101 compliant and likely require underground mining, but he says they offer some fairly low hanging fruit to extend the mine life.

"The others tend to be higher in zinc and precious metals," Van Nieuwenhuyse explains. "Arctic is a bit unusual in that it has relatively high copper to zinc ratio and good precious metal credits.”

Trilogy Metals Inc.’s Bornite camp in Alaska’s Ambler Mining District. Credit: Trilogy Metals Inc.

Core from Trilogy Metals Inc.’s Bornite copper deposit in Alaska. Credit: Trilogy Metals Inc.

Twenty-five km south west of Arctic is Trilogy's Bornite copper deposit - close enough that the company operates both projects out of the Bornite exploration camp.

Bornite is still in the exploration stage. It contains 40.5 million indicated tonnes grading 1.02% copper resulting in 913 million lbs. of copper and 141.9 million inferred tonnes grading 1.74% copper resulting in 5.45 billion lbs. of copper.

Last year, Trilogy drilled 10 step out holes at Bornite. This years' drill program will be approximately 10-12 infill and resource expansion holes, with the goal to update the Bornite 43-101 resource estimate later this year.

Trilogy's operation is bolstered by several strong partnerships: South32 (LON: S32; JSE: S32) has a 3-year option to form a 50-50 joint venture where it contributes US$10 million a year at Bornite (2018 marks year 2); NANA, a for-profit indigenous organization with social responsibility that owns the Bornite lands and works with Trilogy to create local hiring opportunities; and the Alaska Industrial Development and Export Authority (AIDEA), which is preparing a Draft Environmental Impact Statement (EIS) for the Ambler Mining District Industrial Access Project (AMDIAP) - a private road connecting the Ambler Mining District to the rest of Alaska's infrastructure, including four ice-free ports near Anchorage. Trilogy Metals has participated in many of the related public meetings.

The current schedule for the AMDIAP road has the draft EIS completed by fall 2018 and available for public comment. The final EIS is scheduled to be completed by the end of 2019, Van Nieuwenhuyse says. "It fits our timeline just fine, given that we expect it to take us two years to permit Arctic."

Trilogy controls 80% of the Ambler Mining District and will focus this year's field program on geotechnical and hydrology work at Arctic, with the intent of completing feasibility level studies for groundwater and water management, tailings facility and waste rock design, and closure plan, before applying for permits. The project is also awaiting results from an ore-sorting study that will be completed by summer 2018, which could reduce power requirements and shrink tailings ponds.

"It's relatively new technology," Van Nieuwenhuyse says. "Ore sorting as a process isn't new, but the speeds and methodology that have been garnered from the recycling business are newer and better improved technologies."

Trilogy shares are valued at $1.50 with a 52-week range of 68 ? to $2.03. The company, formerly called NovaCopper, has a market capitalization of $164 million.

- The preceding Joint Venture Article is Promoted Content sponsored by Trilogy Metals Inc. and written in conjunction with The Northern Miner. Visit www.trilogymetals.com to learn more.