Trilogy Metals (TSX:TMQ) expects to close its US$35.6 million ($49.72 million) strategic equity investment with the US Department of War (DoW) in September following the execution of definitive agreements.
The investment will advance exploration and development of the Upper Kobuk mineral projects in northwestern Alaska, US, held by Ambler Metals, the company’s 50/50 joint venture with South32 (ASX:S32).
Under the agreements, the DoW will invest US$17.8 million directly in Trilogy Metals for 8.2 million units at US$2.17 per unit. Each unit comprises one share and three-quarters of a 10-year warrant exercisable at US$0.01 following completion of phase one of the Ambler access project or a change of control.
The DoW will also pay US$17.8 million to South32 for 8.2 million Trilogy Metals shares held by South32, alongside a 10-year call option to acquire an additional estimated 6.2 million shares at US$0.01 per share.
Upon completion, the DoW will hold 10% of Trilogy Metals on a non-diluted basis. Both Trilogy Metals and South32 have committed to reinvest the entirety of the proceeds into Ambler Metals.
The transaction includes board representation rights for the DoW, with the right to designate one independent director until October 2028 and appoint a non-voting board observer while holding at least 8 million shares.
President and CEO Tony Giardini says the execution of these definitive agreements is a ‘defining’ milestone for Trilogy Metals and “for building a secure, domestic supply of critical minerals for America in Alaska”.
Spanning roughly 190,929 hectares, the Upper Kobuk mineral projects focus heavily on copper, zinc, lead, gold, silver, and cobalt.
The company has completed key preclosing milestones including the US government’s foreign ownership, control, or influence risk assessment (FOCI) review and Congressional authorisation.
Director of the DoW’s Economic Defense Unit George Kollitides II says the investment demonstrates the department’s strategy to deploy capital where it matters most while eliminating foreign supply vulnerabilities.
The proposed 339.57km Ambler access project would connect the mining district to the Dalton Highway, enabling advancement of exploration and development activities. The DoW has agreed to help facilitate financing for the road construction in coordination with Alaska.
Trilogy Metals is a metal explorer and developer focused on advancing its Upper Kobuk mineral projects in northwestern Alaska.
Write to Paula Fabe at Mining.com.au
Images: Ambler Metals
