Trilogy Metals Turns a Profit on DOW Derivative Gain

The Tip Desk · October 18, 2026 · 4 min read

The company posted $0.2 million of net income for the three months ended August 31, 2026, after an $11.6 million mark-to-market gain on the Department of War derivative offset a larger share of Ambler Metals' loss.

Trilogy Metals Inc. (TMQ) reported net income of $0.2 million for the three months ended August 31, 2026, reversing a $1.7 million net loss a year earlier.

The metals exploration and development company said the swing was driven by an $11.6 million mark-to-market gain on the derivative liability tied to its obligation to issue common shares and warrants to the U.S. Department of War, offset by a larger 50% share of the loss from its investment in Ambler Metals LLC.

Share of loss on the equity investment rose to $9.6 million from $0.9 million in the year-ago quarter. That increase was primarily driven by budgeted exploration activities at Ambler Metals.

Corporate costs also moved. Professional fees were $0.6 million, salaries $0.4 million, and stock-based compensation $0.7 million. General and administrative expense was $0.3 million. Investor-relations expense was $14 thousand.

Cash and cash equivalents were $31.2 million as at August 31, 2026. Adjusted working capital was $30.3 million. The company contributed $17.0 million for its share of funding to Ambler Metals during the nine months ended August 31, 2026.

Its share of Ambler Metals’ fiscal 2026 budget is $17.5 million, of which $17.0 million had been funded as at August 31, 2026. The remaining fiscal 2026 corporate budget is $1.1 million. There is sufficient cash on hand for the next twelve months from the end of the most recent fiscal quarter.

During the nine months ended August 31, 2026, the company used $4.9 million in operating activities and $17.0 million in investing activities, and raised $1.4 million in financing activities, primarily from its at-the-market equity program and option exercises.

On July 13, 2026, a coordinated federal and state permitting schedule for the Arctic Project was published on the Federal Permitting Dashboard. The schedule sets an estimated 29-month integrated review timetable targeting a Record of Decision in September 2028, confirms the U.S. Army Corps of Engineers as lead federal agency, and integrates State of Alaska permitting under the first statewide FAST-41 Memorandum of Understanding in the nation.

Subsequent to quarter end, the Department of War’s strategic equity investment closed on September 11, 2026. The company issued 8,215,570 units at $2.17 per unit for gross proceeds of about $17.8 million. Each unit consisted of one common share and three-quarters of one warrant, resulting in warrants to acquire up to 6,161,678 additional shares at $0.01. After the issuance and the Department of War’s separate acquisition of common shares from South32 Limited, the Department of War held about 9.1% of outstanding common shares.

The proceeds are designated to fund an additional cash capital contribution to Ambler Metals and do not represent additional liquidity for general corporate activities. South32 will make a corresponding pro-rata contribution so that the company’s 50% ownership interest in Ambler Metals remains unchanged. Full proceeds received by Trilogy Metals and South32 are committed to Ambler Metals to advance exploration and development of the Upper Kobuk Mineral Projects in northwestern Alaska. The Department of War has committed to work in good faith to help facilitate financing required for construction of the proposed 211-mile, industrial-use-only Ambler Road.

Upon settlement of the derivative liability at closing, the company recognized a non-cash gain of about $3.9 million and extinguished the liability. Subsequent changes in the value of the common shares will no longer result in fair-value adjustments associated with that derivative.

The U.S. Army Corps of Engineers published a Notice of Intent to prepare an Environmental Impact Statement in September 2026, after quarter end, formally commencing the National Environmental Policy Act review and public scoping phase for the Arctic Project on schedule.

President and Chief Executive Officer Tony Giardini said the third quarter and the weeks that followed had been transformational, citing the closed Department of War investment, the coordinated permitting schedule, and the Notice of Intent on a path to a Record of Decision in September 2028.