Trilogy Metals Inc. (NYSE American: TMQ) has executed definitive agreements with the U.S. Department of War (DOW) for a strategic equity investment of approximately $35.6 million to advance the Upper Kobuk Mineral Projects (UKMP) in northwestern Alaska, according to a company statement.

The UKMP is held by Ambler Metals LLC, a 50/50 joint venture between Trilogy Metals and South32 Limited (ASX, LSE, JSE: S32; ADR: SOUHY).

Under the terms of the agreement, the DOW will invest approximately $17.8 million directly in Trilogy Metals, receiving 8,215,570 units at $2.17 per unit. Each unit consists of one common share and three-quarters of a 10-year warrant exercisable at $0.01 per share. The DOW will separately pay approximately $17.8 million to South32 in exchange for 8,215,570 Trilogy Metals common shares that South32 currently holds, along with a 10-year call option on an additional 6,161,678 shares at $0.01 per share.

Upon closing, the DOW will hold approximately 10% of Trilogy Metals on a non-diluted basis. All proceeds from both transactions are to be reinvested in Ambler Metals.

The DOW will have the right to designate one independent director to Trilogy Metals' board until October 6, 2028, and may appoint a non-voting board observer for as long as it holds at least 8,000,000 common shares. Trilogy Metals has also agreed not to incur third-party debt exceeding $1 billion without DOW approval until January 1, 2029, or a change of control, whichever comes first.

Pre-closing milestones completed include a U.S. Government Foreign Ownership, Control or Influence review and U.S. Congressional authorization. The company expects the transaction to close in September 2026, subject to customary closing conditions.

South32's stake in Trilogy Metals will decrease from approximately 10.7% to approximately 6.0% following the transaction. The DOW has separately agreed to work to help facilitate financing for the proposed 211-mile Ambler Access Road in coordination with the State of Alaska.