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VANCOUVER - The U.S. Department of War (DOW) has agreed to invest approximately $35.6 million to advance exploration and development of critical mineral resources at Trilogy Metals Inc.’s (NYSE American:TMQ) (TSX:TMQ) Upper Kobuk Mineral Projects in Alaska, according to a press release statement issued Monday.
Under the binding letter of intent, the DOW will acquire approximately 10% ownership in Trilogy Metals through two parallel transactions. The department will invest $17.8 million directly in Trilogy in exchange for 8,215,570 units, each comprising one common share and three-quarters of a 10-year warrant. Additionally, the DOW will pay South32 Limited (ASX, LSE, JSE:S32) $17.8 million to purchase 8,215,570 existing Trilogy shares and secure options for additional shares. According to InvestingPro data, South32, with a market capitalization of $8.3 billion, currently appears undervalued based on its Fair Value analysis.
The agreement stipulates that both Trilogy Metals and South32 will use the funds to advance the Upper Kobuk Mineral Projects, which are held by Ambler Metals LLC, a 50/50 joint venture between the two companies. South32 brings strong financial health to the partnership, with InvestingPro analysis showing a healthy current ratio of 2.43 and moderate debt-to-equity of 0.18, alongside impressive revenue growth of 19.16% over the last twelve months.
The transaction also includes provisions for discussions regarding the Ambler Access Project, a proposed 211-mile industrial-use road that would connect the Ambler Mining District to Alaska’s highway system. The DOW has committed to help facilitate financing for the road’s construction in coordination with the State of Alaska.
"This proposed partnership with the U.S. Government represents a significant milestone for Trilogy Metals and for the development of a secure, domestic supply of critical minerals for America in Alaska," said Tony Giardini, President and CEO of Trilogy Metals.
The transaction remains subject to regulatory and stock exchange approvals. Closing is expected following the reauthorization of the Defense Production Act by Congress and completion of a Foreign Ownership, Control, or Influence review by the U.S. Government. If these conditions are not met by March 31, 2026, the letter of intent will terminate.
The Upper Kobuk Mineral Projects are located in the Ambler Mining District of northwestern Alaska, which contains copper, zinc, lead, gold, silver, and cobalt deposits. For investors interested in detailed analysis of mining companies like South32, InvestingPro offers comprehensive financial metrics, Fair Value estimates, and expert insights to make informed investment decisions.
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