Trilogy to seek FAST-41 status for Alaska copper project

Trilogy Metals (TSX: TMQ; NYSE-A: TMQ) said its Ambler Metals joint venture will seek inclusion under the FAST-41 speedy permits program for its Arctic copper-zinc-lead-gold-silver project in Alaska after kicking off the U.S. federal approvals process.

Ambler has filed an application for a Clean Water Act (CWA) Section 404 permit with the U.S. Army Corps of Engineers, a move that initiates federal permitting for mine development and operations at Arctic, Trilogy said late Tuesday in a statement. CWA 404 is the only critical permit required by the Federal government, while all other key permits are issued at the state and local levels.

Located in northwestern Alaska’s Ambler mining district, Arctic ranks among the highest-grade undeveloped polymetallic deposits on earth. It’s one of two key assets, along with the Bornite copper deposit, that Ambler is advancing as part of a long-term strategy to develop a new U.S. domestic source of critical minerals.

“While the commencement of federal permitting is largely expected by the market, we believe it represents a meaningful milestone for the Arctic project,” TD Cowen Securities analyst Craig Hutchison said Wednesday in a note. Inclusion under FAST-41 “could meaningfully expedite Arctic’s permitting timeline.”

Takeover target

Vancouver-based Trilogy and Australian miner South32 (ASX, LSE, JSE: S32) each hold 50% of Ambler. In October, the U.S. government announced it would take a 10% direct ownership stake in Trilogy. The investment is expected to close by May 31.

“With full road and mine permit clarity, we would expect Trilogy to be a target for acquisition, potentially by 50% JV partner South32 or a similar scale producer,” National Bank Financial mining analyst Rabi Nizami said Wednesday in a note.

News of the application comes as Ambler prepares to start geotechnical and exploration drilling next month. Its fully financed field campaign, part of a $35 million (C$48 million) annual budget, is expected to include 40 to 45 drill holes over at least 5,650 meters aimed at advancing final engineering plans for the development of a mine. 

Ambler is also preparing the Bornite site, which located about 25 km southwest, for renewed exploration. Bornite is forecasted to produce 1.9 billion lb. of copper over a 17-year mine life, Ambler says. It has the potential to extend copper mining activities to more than 30 years. 

Both deposits are located within a land package that spans about 1,900 sq. km. In October, President Donald Trump signed an executive order directing U.S. agencies to reissue permits for the Ambler Access Road, the 340-km access route needed for development of the UKMP Mining District that holds both Arctic and Bornite.

Domestic supplier

Construction at Arctic could begin in 2029, with first production following two years later, Hutchison said.

Arctic has gained attention amid U.S. efforts to secure domestic supplies of critical minerals — particularly copper, which is essential for electrification and energy transition technologies.

It’s believed to hold 35.7 million indicated tonnes grading 2.98% copper, 0.79% lead, 4.09% zinc, 0.59 grams gold per tonne, 45.2 grams silver for contained metal of 2.35 million lb. copper, 621 million lb. lead, 3.22 billion lb. zinc, 675,000 oz. gold and 52 million oz. silver, according to a 2023 resource. Inferred resources, meanwhile, were pegged at 4.5 million tonnes grading 1.92% copper, 0.7% lead, 2.93% zinc, 0.43 grams gold and 35.6 grams silver for contained metal of 189 million lb. copper, 69 million lb. lead, 288 million lb. zinc, 62,000 oz. gold and 5 million oz. silver.

A 2023 feasibility study outlined a potential 13-year mine with annual payable copper production of 149 million lb., along with 173 million lb. of zinc, 26 million lb. of lead, 32,538 oz. of gold and 2.8 million oz. of silver.

Based on an 8% discount rate, Arctic’s after-tax net present value was estimated at $1.5 billion, with an internal rate of return of 25.8%. Total capital expenditures were projected at about $1.3 billion.

“Trilogy holds a strong balance sheet, and we expect the next few months to drive more significant news flow as the company accelerates the mine permitting process as well as a field exploration program to revisit the exploration upside along the road corridor,” Nizami said.

Shares of Trilogy rose 3.3% to C$6.19 Wednesday morning in Toronto, boosting the company’s market value to about C$1.1 billion ($800 million). The stock has traded between C$1.59 and C$15.21 in the past year. South32 rose 2% to A$4.50 Wednesday in Australian trading for a market value of about A$20 billion ($14.5 billion).