Trilogy Metals Inc.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Trilogy Metals Inc.

Management’s Discussion & Analysis

For the Quarter Ended May 31, 2026

(expressed in US dollars)

Cautionary notes

Forward-looking statements

This Management’s Discussion and Analysis (“MD&A”) contains “forward-looking information” and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other applicable securities laws. These forward-looking statements may include statements regarding the Company’s (as defined below) work programs and budgets; the aggregate value of common shares that may be issued pursuant to the Company’s at-the-market equity program (the “Nov ATM Program”) and the anticipated use of net proceeds; perceived merit of properties; exploration results and budgets; the Company and Ambler Metals’ funding requirements; mineral reserves and resource estimates; work programs, capital expenditures, operating costs, cash flow estimates, production estimates and similar statements relating to the economic viability of a project; timelines, strategic plans, statements regarding Ambler Metals’ plans and expectations relating to its Upper Kobuk Mineral Projects (the “UKMP”, as defined below); sufficiency of the Ambler Metals’ cash to fund the UKMP; statements regarding timing and planned undertakings of the 2026 field program; the anticipated timing of permitting at the UKMP, including predicted outcomes and benefits of the FAST-41 program; timing of the transaction with the U.S. Department of War; market prices for precious and base metals; statements regarding the Ambler Access Project (also known as the Ambler Mining District Industrial Access Project, “AMDIAP”); or other statements that are not statements of fact. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Statements concerning mineral resource estimates may also be deemed to constitute “forward-looking statements” to the extent that they involve estimates of the mineralization that will be encountered if the property is developed.

​

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible” or variations thereof or stating that certain actions, events, conditions or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

Forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, as well as on a number of material assumptions, which could prove to be significantly incorrect, including about:

​

​

Table of contents

We have also assumed that no significant events will occur outside of our normal course of business. Although we have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. We believe that the assumptions inherent in the forward-looking statements are reasonable as of the date of this MD&A. However, forward-looking statements are not guarantees of future performance and, accordingly, undue reliance should not be put on such statements due to the inherent uncertainty therein.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation:

​

​

Table of contents

​

​

Table of contents

This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in Trilogy’s Annual Report on Form 10-K, filed with the Canadian securities regulatory authorities and the SEC on February 17, 2026, and other information released by Trilogy and filed with the appropriate regulatory agencies.

The Company’s forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and the Company does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change, except as required by law. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

General

This MD&A of Trilogy Metals Inc. (“Trilogy”, “Trilogy Metals”, the “Company” or “we”) is dated July 8, 2026 and provides an analysis of our unaudited condensed interim consolidated financial results for the quarter ended May 31, 2026 compared to the quarter ended May 31, 2025.

​

​

Table of contents

The following information should be read in conjunction with our May 31, 2026 unaudited condensed interim consolidated financial statements and related notes which were prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The MD&A should also be read in conjunction with our audited consolidated financial statements and related notes for the year ended November 30, 2025. A summary of the U.S. GAAP accounting policies is outlined in note 2 of the audited consolidated financial statements. All amounts are in United States dollars unless otherwise stated. References to “Canadian dollars” and “CDN$” are to the currency of Canada and references to “U.S. dollars”, “$” or “US$” are to the currency of the United States.

Richard Gosse, P.Geo., Vice President, Exploration of the Company, is a Qualified Person under National Instrument 43-101 - Standards of Disclosure for Mineral Projects and S-K 1300, and has approved the scientific and technical information in this MD&A.

Trilogy’s shares are listed on the TSX and the NYSE American under the symbol “TMQ”. Additional information related to Trilogy, including our Annual Report on Form 10-K, is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

Description of business

We are a base metals exploration company focused on the exploration and development of mineral properties, through our equity investee, in the Ambler mining district located in Alaska, U.S.A. We conduct our operations through a wholly owned subsidiary, NovaCopper US Inc., which is doing business as Trilogy Metals US (“Trilogy Metals US”). The UKMP were contributed into a 50/50 joint venture named Ambler Metals LLC (“Ambler Metals”) between Trilogy and South32 Limited (“South32”) on February 11, 2020. The projects contributed to Ambler Metals consist of: i) the Ambler lands which host the Arctic copper-zinc-lead-gold-silver project (the “Arctic Project”); and ii) the Bornite lands being explored under a collaborative long-term agreement with NANA Regional Corporation, Inc., a regional Alaska Native Corporation, which hosts the Bornite carbonate-hosted copper project (the “Bornite Project”) and related assets. The Company may also conduct early-stage exploration through a wholly owned subsidiary, 995 Exploration Inc.

Corporate and project activities

Trilogy Annual General Meeting

The Annual General Meeting of shareholders was held on May 13, 2026.  All directors nominated by the Company were elected by shareholders of the Company, with each director receiving greater than 85% of votes cast.

Trilogy Financial Results Compared to Budget

The Company has a 2026 fiscal budget of $5.0 million.  For the three-month period ended May 31, 2026, the Company recorded a net loss of $6.3 million, compared with a budgeted loss of $3.5 million.  The $2.8 million variance was primarily driven by a $2.3 million mark-to-market adjustment related to the derivative liability associated with our obligation to issue shares and warrants to the United States Department of War and the remainder due to stock-based compensation expense associated with the current fiscal year’s annual equity grant.  These two non-cash expenses were not included in the budget.

​

​

Table of contents

For the six-month period ended May 31, 2026, the Company recorded a net loss of $13.4 million, compared with a budgeted loss of $8.4 million.  The $5.0 million variance was primarily driven by non-cash expenses of $3.8 million mark-to-market adjustment related to the derivative liability associated with our obligation to issue shares and warrants to the United States Department of War, stock-based compensation expense related to the current fiscal year’s annual equity grant that were not in the budget, partially offset by lower than planned expenditures from Ambler Metals.

Extension of Binding Letter of Intent with the United States Department of War

On May 30, 2026, the Company, South32, Ambler Metals and the United States Department of War agreed to a second amendment to the binding letter of intent (“LOI”) dated October 6, 2025.  The second amendment extends the deadline for the completion of the transaction from May 31, 2026 to July 31, 2026.

Project Activities

On April 21, 2026, the Company announced that Ambler Metals had commenced the permitting process for the Arctic Project, part of the Upper Kobuk Mineral Projects (“UKMP”) and on May 15, 2026, the Company announced that the Arctic Project was added to the U.S. FAST-41 permitting program. This program is intended to improve coordination and transparency in the federal permitting process as the project moves into environmental review.

​

In a press release dated June 9, 2026, the Company announced the start of the 2026 summer field program at the Upper Kobuk Mineral Projects, with crews mobilizing to site and drilling activities expected to commence in mid-June. The program includes drilling and technical work to support mine planning, permitting, and future development decisions at the Arctic Project, as well as site readiness activities at Bornite and regional exploration target assessments.

​

Summary of results

​

For the three-month period ended May 31, 2026, we reported a net loss of $6.3 million compared to a net loss of $2.2 million for the three-month period ended May 31, 2025. The increase in net loss was primarily driven by a mark-to-market fair value adjustment for the derivative liability related to our obligation to issue shares and warrants to the U.S. Department of War, as well as an increase in our share of loss from Ambler Metals.  The increase in our share of loss from Ambler Metals was primarily driven by higher mineral property expenditures.

​

​

Table of contents

For the six-month period ended May 31, 2026, we reported a net loss of $13.4 million, compared to a net loss of $5.8 million for the same period in 2025.  The increase in net loss was primarily driven by two non-cash items: i) the mark-to-market fair value adjustment for the derivative liability related to our obligation to issue shares and warrants to the U.S. Department of War; and ii) stock-based compensation expense related to our annual grant with higher Black-Scholes values in the current year compared to the prior year.  The net loss was also impacted by an increase in activity at Ambler Metals which resulted in a larger amount for our share of loss on equity investment and an increase in personnel costs due to the addition of senior staff.

Liquidity and capital resources

During the six-month period ended May 31, 2026, we used $3.8 million in operating activities, used $10.5 million in investing activities, and raised $1.4 million in financing activities.  Operating expenditures were driven primarily by corporate salaries, professional fees and annual regulatory filing fees with the U.S. and Canadian securities commissions.  In addition, the Company contributed $10.5 million for our share of funding to Ambler Metals.  These cash outflows were offset by $1.4 million in proceeds from financing activities, primarily from the Company’s at-the-market equity program through which the Company may offer and issue up to $200 million of common shares of the Company from time to time pursuant to an equity distribution agreement dated November 7, 2025, and from the exercise of stock options.

​

As at May 31, 2026, we had cash and cash equivalents of $38.8 million and adjusted working capital of $38.3 million, which are current assets less current liabilities excluding the derivative liability which will be settled by way of the issuance of shares and warrants. There is sufficient cash on hand for the next twelve months from the end of our most recent fiscal quarter, including funding the Company’s remaining fiscal 2026 corporate budget of $5.0 million. Our share of Ambler Metals’ fiscal 2026 budget is $17.5 million, of which $10.5 million had been funded as at May 31, 2026.  Subsequent to May 31, 2026, the Company funded an additional $6.5 million to Ambler Metals, bringing total funding to $17.0 million as of the date of this MD&A.

​

Future cash requirements may vary materially from current expectations. Beyond the next twelve months, the Company may need to raise additional funds in the future to support its operations and administration expenses. Future sources of liquidity are likely in the form of an equity financing but may include debt financing, convertible debt, exercise of options, or other means, including, but not limited to, utilizing the Nov ATM Program.  

Off-balance sheet arrangements

We have no material off-balance sheet arrangements.

Outstanding share data

As at July 7, 2026, we had 172,745,639 common shares issued and outstanding. As at July 7, 2026, we had 9,835,250 stock options outstanding with a weighted-average exercise price of CDN$2.01, 3,581,653 deferred share units and 851,670 restricted share units outstanding. Upon the exercise of all convertible securities, the Company would be required to issue an aggregate of 14,268,573 common shares.

New accounting pronouncements

Issued and Not Effective

In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. The standard is effective beginning with the Company’s Annual Report on Form 10-K for the fiscal year ended November 30,

​

​

Table of contents

2026, and subsequent interim periods, with early adoption permitted. The Company is evaluating the impact of ASU 2023-09 on its disclosure in the annual consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11 “Interim Reporting (Topic 270): Narrow Scope Improvements” (“ASU 2025-11”), to improve the guidance for interim reporting and clarify when that guidance is applicable.  The ASU 2025-11 provides a comprehensive list of required disclosures and also requires entities to disclose events since the last annual reporting period that have a material impact on the entity.  ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.  For the Company, the guidance becomes effective in the first interim reporting period of the fiscal period of the fiscal year ended November 30, 2029.  Early adoption is permitted.  Management is currently evaluating ASU 2025-11 to determine its impact on the Company’s disclosures.

Critical accounting estimates

The most critical accounting estimates upon which our financial status depends are those requiring estimates of the recoverability of our equity method investment in Ambler Metals LLC, fair value measurement of the derivative liability related to our obligation to issue shares and warrants to the U.S. Department of War and valuation of stock‐based compensation.

​

Impairment of Investment in Ambler Metals LLC

Management assesses the possibility of impairment in the carrying value of its equity method investment in Ambler Metals whenever events or circumstances indicate that the carrying amount of the investment may not be recoverable.  Ambler Metals is a non-publicly traded equity investment owning exploration and development projects. Significant judgments are made in assessing the possibility of impairment. The Company determines whether a potential triggering event or other-than-temporary impairment has occurred by reviewing the recoverability of the underlying assets of Ambler Metals and considering whether there have been changes to the development plans or project strategy.  If the Company concludes that sufficient evidence of a potential other-than-temporary impairment exists, an assessment of fair value is performed. If the underlying assets are not recoverable, the Company records an impairment charge equal to the difference between the investment carrying amount and its fair value.  

​

Fair Value Measurement of Derivative Liability

The Company measures the proposed strategic investment by the Department of War under the binding letter of intent as a derivative liability at fair value on a recurring basis.  The valuation of this liability requires the use of significant unobservable inputs and therefore represents a level 3 fair value measurement.  The valuation relies on management judgement and assumptions on the completion of the Ambler Access Project which is subject to regulatory, political and permitting processes that are not within the Company’s control.  As a result, estimating the probability of project completion requires significant judgement and incorporates inherently uncertain assumptions.

​

​