The Gates of the Arctic National Park and Preserve in Alaska, through which an access road supporting a Trilogy Metals copper mine would pass.Annika Hammerschlag/The Associated Press
The U.S. government has landed a sizable equity stake in Canadian junior miner Trilogy Metals Inc. TMQ-T as part of an aggressive push by the Trump administration to bolster national security by improving American access to key critical minerals.
Vancouver-based Trilogy in a release late Monday said the U.S. government will pay US$35.6-million to buy 16.4 million shares at US$2.17 apiece for a 10-per-cent stake. It will also have the right to acquire millions of additional shares over a 10-year period at the nominal exercise price of 1 US cent a share, contingent on the company building an access road into its minerals project in Alaska.
Before the deal was announced there was considerable doubt over whether the road project would be built owing to a permitting decision in 2024 by the Biden administration that blocked it on environmental grounds. But alongside the funding announcement, Trilogy said that the U.S. government is granting permits for the construction of the 340-kilometre Ambler Road, overturning the Biden ruling.
Shares in Trilogy on Monday surged on the NYSE American exchange on Tuesday by more than 210 per cent.
In its release, Trilogy chief executive officer Tony Giardini said the 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.”
Trilogy holds a 50-per-cent stake in the Upper Kobuk Mineral Projects in northwestern Alaska. The rest is owned by Australia’s South32 Ltd. SOUHY UKMP contains deposits of copper, as well as zinc, lead, gold and silver. Copper is one of several critical minerals alongside lithium, and cobalt, that is used in low-carbon energy.
Mr. Trump in recent months has announced several splashy deals in the resource sector to gain a stake in projects the White House has deemed critical to the country’s national security.
“This is very much the Trump administration mindset, that they would like to do everything and be totally independent themselves,” said Heather Exner-Pirot, director of energy, natural resources and environment at the Macdonald-Laurier Institute in Ottawa.
“They would like to have all the critical minerals developed in the United States.”
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Last week, the Trump administration announced it had secured a 5-per-cent equity stake in Canadian lithium company Lithium Americas Corp., LAC-T and an additional 5-per-cent ownership in its Thacker Pass mine in Nevada as part of a renegotiation of a debt deal that had been previously agreed upon by the Biden administration.
The U.S. government has also negotiated stakes in chip maker Intel Corp. INTC-Q and rare-earths company MP Materials Corp. MP-N in recent months as part of its activist strategy.
A recurring theme in Mr. Trump’s investments over the past few months has been obtaining terms that would be near-impossible for the private sector to replicate, demanding a say in the boardroom and erecting guardrails around the financial management of the companies.
In the case of the Trilogy Metals transaction, the U.S. government can nominate a director to the board, and the company has also agreed to constraints around leverage. Until 2029, Trilogy can’t borrow more than US$1-billion from third parties unless the government approves it.
Ms. Exner-Pirot sees few issues for Canadian companies taking funds from the U.S. government, especially considering that many have historically tapped China, including from state-owned enterprises.
“I don’t think ethically we should look more poorly on American state-owned investments, especially when it’s not within our own borders,” she said.
Before Mr. Trump started his second term in January, the Biden administration and Ottawa announced several joint funding initiatives for small Canadian development-stage companies in 2024 in the form of grants worth tens of millions each. Some companies received funding from the U.S. even if the critical minerals project was in Canada.
But under Mr. Trump, the U.S. is going it alone without Canada, moving much faster than before, and behaving more like a private equity investor in demanding equity in companies in return for investment.
It’s also clear that Mr. Trump is zeroing in on projects that are located on American soil and is not nearly as interested in those that are in Canada. Attention is now turning to the scores of other Canadian development-stage companies with projects in the U.S. that could be next in line for a deal with Mr. Trump.