Trilogy Metals Inc.

Current report

The DOW Transaction Documents contain covenants that may restrict our ability and the ability of our subsidiaries to take actions management believes are important to our long-term strategy, and therefore could have a material adverse effect on our business, prospects, financial condition, or results of operations.

Current report

The DOW Transaction Documents contain covenants requiring us to take certain actions or restricting our ability to take certain actions. The covenants in the DOW Transaction Documents restrict us with respect to, among other things, (i) incurring borrowed debt in excess of $1,000,000,000 in the aggregate until the earlier of January 1, 2029 or a change of control, without DOW prior written approval, and (ii) for so long as the DOW meets certain beneficial ownership percentages of the Company and the current owners of Ambler Metals continue to beneficially own at least 25% of the voting and/or economic ownership interests of Ambler Metals, we are bound by certain “Restricted Entity Event” covenants, including providing the DOW with notice of certain acquisitions by “Restricted Entities,” including when a Restricted Entity beneficially owns five percent or more of the outstanding voting securities of the Company or South32, or gains the right to appoint a director to those boards or obtain material commercial rights with Ambler Metals. Further, the parties will not agree, and will revise Ambler Metals’ organizational documents to prohibit, specified investments without DOW consent in Ambler Metals, or the owners of Ambler Metals by Restricted Persons, or the direct or indirect sale or transfer of material assets or products of Ambler Metals to any Restricted Entity.

Current report

Compliance with the covenants contained in the DOW Transaction Documents could restrict our ability to take actions that management believes are important to our long-term strategy. If strategic transactions we wish to undertake are prohibited by the DOW Transaction Documents, our ability to execute our long-term strategy could be materially adversely affected.

Current report

The United States Department of War’s ownership interest may create additional governance, regulatory and geopolitical considerations for the Company.

Current report

The DOW ownership interest and Board observer right may result in increased governmental engagement with, or perceived influence over, the Company. Shareholders, business partners, regulators, foreign governments or other stakeholders may perceive the DOW as having influence over certain aspects of the Company’s business or strategic direction. Such perceptions could affect the Company’s relationships with investors, strategic partners, governments and other stakeholders.

Current report

The Company may be subject to restrictions or additional compliance requirements regarding its dealings or relationships with certain entities, including entities that are designated or otherwise considered restricted under applicable U.S. government laws, regulations or policies. These requirements could limit the Company’s ability to enter into relationships with prospective investors, suppliers, contractors, customers, financing sources or strategic partners and may require the Company to undertake additional diligence and compliance procedures. The scope and application of such restrictions may also change over time as U.S. government laws, regulations, policies and national security priorities evolve.

Current report

Changes in U.S. government policies, administrations, national security priorities or critical minerals strategies could also affect the DOW’s relationship with the Company or its investment objectives. The DOW’s involvement may result in additional regulatory, compliance, reputational or geopolitical considerations for the Company. Compliance with applicable restrictions, or changes to those restrictions, could increase costs, restrict potential business or financing opportunities, or adversely affect relationships with existing or prospective counterparties. Any such developments could affect the Company’s business relationships, strategic opportunities, access to capital or the market price of its common shares.