Mr. Matthew Keevil reports

TRILOGY METALS ANNOUNCES EXECUTION OF DEFINITIVE AGREEMENTS FOR STRATEGIC EQUITY INVESTMENT BY THE U.S. DEPARTMENT OF WAR

Trilogy Metals Inc. has executed definitive agreements with the United States Department of War (the DoW or U.S. government) in connection with the previously announced strategic equity investment of approximately $35.6-million (U.S.) to advance exploration and development of the Upper Kobuk mineral projects (UKMP) in northwestern Alaska.

The UKMP is held by Ambler Metals LLC, the company's 50/50 joint venture with South32 Ltd. (Australian Securities Exchange, LSE, JSE: S32; ADR: SOUHY).

The execution of the definitive documentation reflects the terms of the transaction previously announced by the company and marks the final major step ahead of closing. Subject to the satisfaction or waiver of customary closing conditions, the company expects the transaction to close in September, 2026.

Summary of the transaction

Under the definitive agreements, and consistent with the terms previously announced:

• U.S. government investment in Trilogy Metals: The DoW will invest approximately $17.8-million (U.S.) in Trilogy Metals in exchange for 8,215,570 units at a price of $2.17 (U.S.) per unit, with each unit comprising one common share of Trilogy Metals and three-quarters of a 10-year warrant. Each full warrant will be exercisable at an exercise price of one U.S. cent to acquire one common share of Trilogy following the earlier of (i) the completion of phase 1 of the Ambler access project (or Ambler Road) or (ii) a change of control of the company. The entire proceeds received by Trilogy Metals will be reinvested in Ambler Metals.
• U.S. government investment through South32: The DoW will pay approximately $17.8-million (U.S.) to South32 in exchange for 8,215,570 common shares of Trilogy Metals that South32 currently holds, together with a 10-year call option to acquire an additional 6,161,678 common shares of Trilogy Metals from South32 at a price of one U.S. cent per share, exercisable following the earlier of (i) the completion of phase 1 of the Ambler Road or (ii) a change of control of the company. The entire proceeds received by South32 will be reinvested in Ambler Metals.
• DoW ownership: Upon completion of the transaction, the DoW will hold approximately 10 per cent of Trilogy Metals, on a non-diluted basis.
• Use of proceeds: Trilogy Metals and South32 have committed to use the funds to advance the exploration and development of the UKMP.
• Board representation: The DoW will have the right to designate one independent third party director to the board of directors of Trilogy Metals until Oct. 6, 2028, and, for so long as it holds at least eight million common shares, to appoint a non-voting board observer.
• Indebtedness covenant: From closing until the earlier of (i) Jan. 1, 2029, and (ii) any change of control of the company, Trilogy Metals has agreed not to incur obligations with respect to third party indebtedness for borrowed money in excess of $1-billion (U.S.) in the aggregate without the prior written approval of the DoW.

Preclosing milestones completed

The execution of definitive agreements follows the completion of the key milestones required to finalize the investment, including:

• FOCI review completed: The U.S. government has completed its foreign ownership, control or influence (FOCI) risk assessment of Trilogy Metals.
• Authorization by U.S. Congress: The U.S. Congress has authorized, continued authorization and/or reauthorized the relevant authorities.

Tony Giardini, president and chief executive officer of Trilogy Metals, commented: "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. Having finalized the transaction documents to the standard this landmark investment deserves, we're pleased to be positioned to close on this financing from the U.S. government in the near term. We appreciate the investment from the Department of War in Trilogy Metals and in the Upper Kobuk mineral projects, and we look forward to closing and to continuing our work with South32, federal and state agencies, and Alaska native communities to responsibly develop this exceptional district."

George K. Kollitides II, director of the Department of War's Economic Defense Unit, added: "Investing in the Upper Kobuk mineral projects demonstrates the War Department's pro-active strategy to deploy capital where it matters most. By financing this project with Trilogy Metals and supporting the infrastructure necessary to develop the Ambler mining district, we are eliminating foreign supply vulnerabilities and investing directly in American industrial strength."

In connection with the transaction, Trilogy Metals is granting registration rights to the DoW, with customary indemnification provisions as well as participation rights for certain types of offerings in the future. Finally, Ambler Metals, its direct members and the DoW have entered into a co-operation agreement pursuant to which the DoW is provided with a board observer right; consent rights restricting investments in, and asset and product sales by, Ambler Metals; and veto rights under limited circumstances in order to protect Ambler Metals from control by certain foreign entities. Separately, the DoW has agreed to work in good faith to help facilitate financing required for the construction of the Ambler access project in co-ordination with the State of Alaska.

The company intends to rely on the eligible interlisted issuer exemption in accordance with Section 602.1 of the TSX Company Manual in connection with the transaction.

The Ambler access project or Ambler Road is a proposed 211-mile, industrial-use-only road from the Ambler mining district to the Dalton Highway that would enable the advancement of exploration and development of the company's mineral projects in northwestern Alaska. The Ambler Road is held by the Alaska Industrial Development and Export Authority (AIDEA), a public corporation of the state of Alaska.

Early warning disclosure

Based upon the daily average Canadian-dollar/U.S.-dollar exchange rate quoted by the Bank of Canada as of the date hereof, the consideration of $17,827,787 (U.S.) for the transaction between the DoW and South32 will be equivalent to approximately $24.7-million or $3.01 per share.

As of the date hereof, South32 has beneficial ownership of, or control and direction over, 18,595,311 common shares of Trilogy, representing approximately 10.7 per cent of the issued and outstanding common shares of Trilogy on a non-diluted basis. As a result of, and immediately following, the transaction, South32's beneficial ownership, control and direction will be reduced to 10,379,741 common shares of Trilogy, representing approximately 6.0 per cent of the issued and outstanding common shares of Trilogy on a non-diluted basis as of the date hereof.

South32 advises that the common shares of Trilogy will be disposed of pursuant to the definitive agreements for investment purposes. Pursuant to the definitive agreements, for a period of 10 years following closing, the DoW will have the option to purchase 6,161,678 common shares of Trilogy from South32 at a price of one U.S. cent per share subject to certain terms and conditions, and South32 will be obligated to hold such shares at all times during that period and to sell them to the DoW upon exercise of the option. In addition, South32 may, depending on market and other conditions, increase or decrease its beneficial ownership of Trilogy's securities, whether in the open market, by privately negotiated agreements or otherwise, subject to a number of factors, including general market conditions and other available investment and business opportunities. South32's head office is located at Level 2, 100 St Georges Terrace, Perth, Western Australia, 6000, Australia.

This disclosure is provided under the early warning system under applicable Canadian securities laws, which also requires an early warning report to be filed containing additional information with respect to the foregoing matters. A copy of the early warning report will be available on SEDAR+ under Trilogy's issuer profile and may be obtained upon request from South32 by contacting Ben Baker at 61-403-763-086.

About Trilogy Metals Inc.

Trilogy Metals is a metal exploration and development company holding a 50-per-cent interest in Ambler Metals LLC, which has a 100-per-cent interest in the Upper Kobuk mineral projects (UKMP) in northwestern Alaska. On Dec. 19, 2019, South32 Ltd., a globally diversified mining and metals company, exercised its option to form a 50/50 joint venture with Trilogy Metals. The UKMP is located within the Ambler mining district which is one of the richest and most prospective known copper-dominant districts in the world. It hosts polymetallic volcanogenic massive sulphide (VMS) deposits that contain copper, zinc, lead, gold and silver, and carbonate replacement deposits which have been found to host high-grade copper and cobalt mineralization. Exploration efforts have been focused on two deposits in the Ambler mining district -- the Arctic VMS (volcanogenic massive sulphide) deposit and the Bornite carbonate replacement deposit. Both deposits are located within a land package that spans approximately 190,929 hectares. Ambler Metals has an agreement with NANA Regional Corp. Inc., an Alaska native corporation, that provides a framework for the exploration and potential development of the Ambler mining district in co-operation with local communities. Trilogy Metals' vision is to develop the Ambler mining district into a premier North American copper producer while protecting and respecting subsistence livelihoods.

We seek Safe Harbor.