ITEM
1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not
required
ITEM
2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not
required
ITEM
3. KEY INFORMATION
A.
Selected financial data.
The
following financial data summarizes selected financial data for our company prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) for the
five fiscal years ended December 31, 2018, 2017, 2016, 2015 and 2014. The information presented below for the five year period
ended December 31, 2018, 2017, 2016, 2015 and 2014 is derived from our financial statements which were examined by our
independent auditors. The information set forth below should be read in conjunction with our audited annual financial statements
and related notes thereto included in this annual report, and with the information appearing under the heading “Item 5 —
Operating and Financial Review and Prospects”. Al financial information is expressed in thousands of Canadian dollars and
in thousands of Danish Krones (“DKK”), except per share amounts and except as otherwise indicated.
North
American Nickel Inc. (the “Company”) was incorporated on September 23, 1983. The Company changed its name from
Widescope Resources Inc. to North American Nickel Inc. effective April 19, 2010. The Company’s principal business activity
is the exploration of natural resource properties.
North
American Nickel Inc.
Selected
Financial Data in accordance with IFRS for the years 2018, 2017, 2016, 2015 and 2014.
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
|
Years Ended December 31
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
Net
operating revenues
|
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(3,022)
|
|
(2,879
|
)
|
(2,877
|
)
|
(2,389
|
)
|
(3,741
|
)
|
Comprehensive
loss
|
|
$
|
(3,022
|
)
|
(2,879
|
)
|
(2,877
|
)
|
(2,389
|
)
|
(3,741
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share from operations
|
|
$
|
(0.00
|
)
|
(0.01
|
)
|
(0.01
|
)
|
(0.01
|
)
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
$
|
88,538
|
|
74,189
|
|
62,906
|
|
51,165
|
|
43,268
|
|
Common
shares issued
|
|
787,928,500
|
|
554,598,167
|
|
368,581,886
|
|
207,629,506
|
|
169,964,679
|
|
Weighted
average shares outstanding
|
|
718,248,135
|
|
465,929,638
|
|
269,778,932
|
|
188,384,506
|
|
157,986,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
67,500
|
|
53,697
|
|
41,882
|
|
32,729
|
|
27,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets (liabilities)
|
|
$
|
66,944
|
|
52,728
|
|
41,700
|
|
32,480
|
|
26,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends declared per common share
|
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
Exchange
rates (CAD$ to U.S.$) period average
|
|
$
|
1.2957
|
|
1.2980
|
|
1.2785
|
|
1.2785
|
|
1.1046
|
|
Exchange rates (CAD$ to U.S.$) for most recent six months
|
|
Period High
|
|
|
Period Low
|
|
October 2018
|
|
$
|
0.7805
|
|
|
|
0.7617
|
|
November 2018
|
|
$
|
0.7639
|
|
|
|
0.7515
|
|
December 2018
|
|
$
|
0.7576
|
|
|
|
0.7271
|
|
January 2019
|
|
$
|
0.7608
|
|
|
|
0.7335
|
|
February 2019
|
|
$
|
0.7639
|
|
|
|
0.7512
|
|
March 2019
|
|
$
|
0.7596
|
|
|
|
0.7438
|
|
Exchange rate (CAD$ to U.S.$) April 24,
2019
|
|
$
|
0.7446
|
|
|
|
0.7400
|
|
B.
Not
required
C.
Not
required
D.
Risk
factors.
The
business of the Company entails significant risks, and an investment in the securities of the Company should be considered highly
speculative. An investment in the securities of the Company should only be undertaken by persons who have sufficient financial
resources to enable them to assume such risks. The following is a general description of all material risks, which can adversely
affect the business and in turn the financial results, ultimately affecting the value of an investment the Company.
The
Company has no viable commercial business.
Having
no viable business it is difficult to determine a price for the common shares. That price must therefore be dependent on the value
that each individual buyer and seller place on the future prospects of the company, rather than any objective measurement. This
is a very risk position for shareholders, as the majority perception may turn negative and price decline severely.
The
Company has limited funds.
Funds
are the fuel needed to drive the company. Should current funds be consumed, and the company not be able to attract more capital,
prospects for shareholders would become extremely negative, and shareholder losses will inevitably occur.
There
is no assurance that the Company can access additional capital.
The
company will need to demonstrate performance in order to attract additional capital. As the mineral exploration business has a
high element of chance associated with it, it is possible that none of the current properties will have any value. The capital
markets could perceive this to be a demonstration of poor performance, and be unwilling to provide additional funds. Should this
happen, shareholders will incur significant losses.
There
is no assurance that the transactions disclosed herein will be successful in its quest to find a commercially viable quantity
of mineral resources.
Unless
the Company is able to secure other more viable projects, providing better future prospects, buyer interest for common shares
will decline severely, resulting in lower prices and significant shareholder losses.
There
is no assurance that other prospective mineral properties or other assets can be acquired, and if acquired that the necessary
additional capital can be attracted.
Either
of these is possible. Either occurring will have the same inevitable outcome. Demand for the common shares will decline severely,
resulting in a drop in trading price, and significant shareholder losses.
The
Company has a history of operating losses and may have operating losses and a negative cash flow in the future.
This
will mean that additional shares will need to be sold to fund operations. Without a concurrent improvement in future prospects,
this will result in supply of stock exceeding demand, and much lower prices. This will cause shareholders to lose money.
The
Company’s auditors have indicated that U.S. reporting standards would require them to raise a concern about the company’s
ability to continue as a going concern.
Additional
capital will need to be raised. This could result in the perception of lowered future prospects, lower demand for the Company’s
common share, lower stock prices, and shareholder losses.
There
can be no assurance that a liquid market will develop for the Company’s shares and therefore no assurance that shareholders
will be able to sell their shares.
Lack
of liquidity that prevents shareholders from selling, or limits their abilities to sell, will all too likely lead to significant
losses for shareholders.
Management
has little expertise in mining, which may ultimately cause shareholders to lose money.
Management
may waste the Company’s limited capital on worthless properties, or it may do the wrong things with properties that could
have value. Either way, the outcome will be the same. Money will have been wasted without any corresponding creation of value.
This will cause shareholders to lose patience and lose interest. This could lead to significantly increased selling of shares,
driving down the price, and leading to losses for investors.
The
Company’s common stock is thinly traded so it is more susceptible to extreme rises or declines in price, and you may not
be able to sell your shares at or above the price paid.
You
may have difficulty reselling shares of our common stock, either at or above the price paid, or even at fair market value. The
stock market often experiences significant price and volume changes that are not related to the operating performance of individual
companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes
may cause the market price of our common shares to decline, regardless of how well the company performs. This may be exaggerated
by the fact that the shares trade on the over-the-counter bulletin board (“OTCBB”), which is owned and operated by
the Financial Industry Regulatory Authority (“FINRA”). Trading on the OTCBB is often extremely sporadic, and subject
to manipulation by market-makers, and short sellers. This may cause you to lose money as you may have difficulty selling the shares
that you own.
The
Company’s common stock is subject to the “penny stock” regulations, which are likely to make it more difficult
to sell.
A
“penny stock” is generally a stock trading under $5.00 per share, and not registered on a national securities exchange
or quoted on the NASDAQ national market. The SEC has adopted rules that regulate broker-dealer practices in connection with
transactions in penny stocks. These rules, intended to protect investors, generally have the result of reducing trading in such
stocks, restricting the pool of potential investors, and making it more difficult for investors to sell their shares once acquired.
Since our common shares are subject to the “penny stock” rules, you may find it more difficult to sell your shares.
As
a foreign issuer, the Company is exempt from certain informational requirements of the Exchange Act to which domestic issuers
are subject.
As
a foreign issuer we are not required to comply with all of the informational requirements of the Exchange Act. As a result, there
may be less information concerning our company publicly available than if we were a domestic United States issuer. In addition,
our officers, directors, and principal shareholders are exempt from the reporting and short profit provisions of Section 16
of the Exchange Act, and the rules promulgated thereunder. Therefore, our shareholders may not know on a timely basis when
our officers, directors, and principal shareholders purchase or sell shares of our common stock.
As
a Canadian company with most assets and key personnel located outside the United States, you may have difficulty in acquiring
United States jurisdiction, or enforcing a United States judgment against us, our key personnel, or assets.
As
a Canadian company many of our assets and key personnel, including directors and officers, reside outside the United States. As
a result, it may be difficult or impossible for you to effect service of process within the United States upon us or any of our
key personnel or to enforce against us or any of our key personnel judgments obtained in United States’ courts, including
judgments relating to United States federal securities laws. Canadian courts may not permit you to bring an original action in
Canada, or recognize or enforce judgments of United States courts obtained against us predicated upon the civil liability provisions
of federal securities laws of the United States, or of any state thereof. Furthermore, because many of our assets are located
in Canada, it would be extremely difficult to access these assets to satisfy any award entered against us in a United States court.
Accordingly, you may have more difficulty in protecting your interests in the face of actions taken by our management, members
of our board of directors, or our controlling shareholders than you would otherwise as shareholders of a United States public
company.
The
Company does not intend to pay any common stock dividends in the foreseeable future.
We
have never declared or paid a dividend on our common stock, and, because we have very limited resources, we do not anticipate
declaring or paying any dividends in the foreseeable future. It is unlikely that the holders of our common shares will have an
opportunity to profit from anything other than potential appreciation in the value of our common shares. If you require dividend
income, you should not rely in an investment in our common shares to provide it.
Future
issuances of common stock may depress stock prices and dilute your interest.
We
may issue additional shares of our common stock in future financings, or grant stock options to our employees, officers, directors,
and consultants under our stock incentive plan. Any such issuances could have the effect of depressing the market price of our
common stock, and, in any case, would dilute the percentage ownership interests in our company of our shareholders. In addition
we could issue securities having rights, preferences and privileges senior to those of our common shares. This could depress the
value of our common shares.
ITEM
4. INFORMATION ON THE COMPANY
A.
History and development of the Company.
North
American Nickel Inc. (the “Company”) was incorporated under the laws of the Province of British Columbia, Canada,
by filing of Memorandum and Articles of Association on September 20, 1983, under the name Rainbow Resources Ltd. The company’s
name was changed to Widescope Resources Ltd. on May 1, 1984, and to Gemini Technology Inc. on September 17, 1985. In
conjunction with a reverse split of its common shares on a five-old for one-new basis, the Company adopted the name International
Gemini Technology Inc., effective September 23, 1993. The Company’s name was changed to Widescope Resources Inc., effective
July 12, 2006. Effective April 19, 2010, the Company’s shareholders approved a special resolution to reorganize
the Company’s capital structure by consolidating in a reverse stock split the existing common shares on the basis of every
2 old shares being equal to 1 new share and concurrently increasing the authorized capital of the Company from 100,000,000 common
shares without par value to an unlimited number of common shares without par value. Also effective this date, the Company’s
name was changed to North American Nickel Inc. to reflect its new focus. All references to common shares, stock options, warrants
and weighted average number of shares outstanding in this discussion and the accompanying consolidated financial statements retroactively
reflect the share consolidation unless otherwise noted.
In
April 2010, the Company initiated a series of actions to realign its focus into the field of nickel exploration in the prolific
nickel belts around Sudbury, Ontario and Thompson, Manitoba. Concurrently, the directors of the Company appointed new senior management
to oversee the daily operations of the Company.
On
May 3, 2011, the Company’s listing application was conditionally accepted by the TSX-V Venture Exchange. On May 30,
2011, the common shares of the Company began trading under the symbol “NAN”.
On
August 15, 2011, the Company was granted an exploration license by the Bureau of Minerals and Petroleum of Greenland for
exclusive exploration rights over an area totalling 4,841 square kilometres located near Sulussugut, Greenland.
On
March 4, 2012, the Company was granted an additional exploration license by the Bureau of Minerals and Petroleum of Greenland
for exclusive exploration rights over an area covering a total of 142 square kilometres license and located near Ininngui, Greenland.
On
January 19, 2015, the Company signed an exclusivity agreement with Minelco AS (“Minelco”) to acquire the deep
water Seqi Port (the “Port”). A report was prepared summarizing environmental due diligence and preliminary assessment
of reindeer by Golder Associates — INUPLAN in and around the Port and upon further review, the decided to not pursue the
Seqi Port assignment.
On
July 13, 2017, the Company announced that it has finalized the details for the acquisition of a watershed (“0.6H”)
prospecting licence that overlaps the eastern boundary of its 100% owned Maniitsoq nickel sulphide project in southwest Greenland.
On
March 1, 2018, the Company announced that it had received the final Hydropower Feasibility Assessment Study within watershed
06.H located on the eastern flank of the Company’s 100% owned Maniitsoq nickel sulphide project in Southwest Greenland.
On
May 4, 2018, the Company acquired new properties, Ikertoq, mineral licence No. 2018/31 and Carbonatite, mineral
licence No. 2018/21 located on the Company’s 100% owned Maniitsoq nickel sulphide project in Southwest Greenland.
On
September 18, 2018, the Company has completed its 2018 exploration and drilling program with a total of 14,287.6 metres of drilling
at the Company’s 100% owned Maniitsoq nickel-copper-cobalt-PGM project in Southwest Greenland.
B.
Business overview
The
Company has been focusing on the development of its camp scale Mannitsoq property in south-western Greenland since it was granted
the first exploration license on August 15, 2011. The Maniitsoq property consists of four exploration licenses, No. 2011/54 (the
“Sulussugut License”) and No. 2012/28 (the “Ininngui License”) comprising 2,689 and 296 square kilometres,
respectively and the recently acquired Carbonatite property No. 2018/21 (63 km2) and the Ikertoq property No. 2018/31 (33 km2).
The Maniitsoq property is centred on the 75 kilometre by 15 kilometre Greenland Norite Belt which hosts numerous high-grade nickel-copper
sulphide occurrences associated with mafic and ultramafic intrusions.
In
2016, the Company completed an exploration program comprising 9,596 metres of drilling in 30 drill holes and two drill hole extensions,
borehole electromagnetic surveys, 13 line-kilometres of surface electromagnetic surveying, 53 line-kilometre of surface induced
polarization (IP) surveying and ground follow-up of VTEM, geological and remote sensing targets.
The
company filed a National Instrument 43-101 Technical Report on the Maniitsoq property on March 30, 2016 and on April 11, 2016,
reported the results of QEMSCAN mineralogical analyses from drill core announcing the potential for high nickel recoveries from
Maniitsoq mineralization, similar to results from previous studies.
The
primary exploration objective in 2017 was step-out drilling at three key locations, the Imiak Hill Complex (IHC), Fossilik and
P-013SE, to advance one or more areas to the delineation drilling stage for 2018. Approximately 8,800 metres of diamond drilling
were completed for 2017.
The
2018 exploration and drilling program at its Maniitsoq project was completed in September with a total 14,287 metres of drilling,
representing an increase of 5,520 metres from the previous program in 2017. The drilling was focused on testing the geochemical
strategy within several of the main Maniitsoq intrusions and has confirmed the presences of the melanorite as well as re-affirmed
the significance of the high magnesium oxide (MgO) control on NiS mineralization.
As
of December 31, 2018, the Company has spent $55,732 and $5,121 on exploration costs for the Sulussugut License and Ininngui License,
respectively.
Effective
May 4, 2018, the Company was granted an new exploration license (the “Carbonatite License”) by the BMP of Greenland
for exclusive exploration rights of an area located near Maniitsoq in West Greenland. The Company paid a license fee of $7 (DKK
31) upon granting of the Carbonatite License. The Carbonatite License is valid for 5 years until December 31, 2022, with December
31, 2018 being the first year. As of December 31, 2018, the Company has spent $1,362 on exploration costs for the Carbonatite
License.
The
Ikertoq License was granted in May 2018 for exclusive exploration rights of an area located near Kangeriussaq in West Greenland.
As of December 31, 2018, the license was relinquished due to no further plans to carry exploration work.
On
January 4, 2016, the Company made and entered into a 10 year Metallic Minerals Lease with the Michigan Department of Natural
Resources for an area covering approximately 320 acres. Under the terms of the lease, an annual rental fee will be required at
a rate of US $3.00 per acre per lease for years 1-5 and US $6.00 per acre per lease year for the years 6-10. A minimum royalty
of US $10 per acre is due for the eleventh year of the lease and increases by $US 5 per acre through to the twentieth year. For
the twentieth year of the lease and thereafter for the life of the lease, the minimum royalty is US $55 per acre per year.
On
April 28, 2016 the Company issued to Sentient Executive GP IV Limited 952,380 common shares for a fee on the advance
of the loan. The shares were booked at a fair value of $95.
On
April 22, 2016, the Company entered into a term loan with Sentient Executive GP IV Limited (“Sentient”) and received
an advance of $4,500. The loan is due on April 30, 2017 and has been made on an interest free basis. Sentient is to be paid
952,380 common shares, which is the equivalent value of 2.2% of the principal amount of the loan, as a fee for advancing the loan.
The fee was booked at a fair value of $95. The loan is subject to early pre-payment in the event that, during the term of the
loan, the Company completes a private placement of gross proceeds of $2,000 or more. On July 21, 2016, the Company closed
its market offering of units of the Company for total gross proceeds of $6,950 and on September 12, 2016, the Company closed
a non-brokered private placement for gross proceeds of $5,050 which being the maximum offering amount raised, Sentient was repaid
the full loan of $4.5 million.
On
July 21, 2016 the Company issued 92,668,908 units at a price of $0.075 per unit in a market offering for gross proceeds of
$6,950. The Company reported $458 in issuance costs against the raised funds.
On
July 21, 2016 the Company issued 1,203,695 warrants at a price of $0.075 per unit for an agent fee to Paradigm as per the
Company’s amended and restated short form prospectus.
On
September 12, 2016 the Company closed a non-brokered private placement and issued 67,331,093 units at a price of $0.075 per
unit for gross proceeds of $5,050.
On
August 15, 2017 the Company closed a non-brokered private placement and issued 40,982,448 units at a price of $0.075 per
unit for gross proceeds of $3,074.
On
June 8, 2017 the Company closed a brokered placement through a prospectus and issued 145,030,833 units at a price of $0.075
per unit for gross proceeds of $10,877. The Company also issued 1,965,093 warrants at a price of $0.075 per unit for an agent
fee to Paradigm as per the Company’s prospectus.
On
April 19, 2018 the Company closed a non-brokered private placement and issued 233,333,333 units at a price of $0.075 per unit
for gross proceeds of $17,500.
Organizational
structure.
The
Company is part of no other group. During the year ended June 30, 2006 Outback Capital Inc. dba Pinefalls Gold (“PFG”)
a private Alberta corporation became a majority-owned subsidiary of the Company. PFG was incorporated under the Alberta
Business
Corporations Act
on February 6, 2001. Effective May 31, 2010, the Company completed an agreement with an arm’s
length entity that resulted in it divesting of its interest in Outback Capital Inc. In June 2015 the Company incorporated
North American Nickel (US) Inc. to hold a mineral lease in Michigan, which was granted in January 2016.
C.
Property, plants and equipment.
The
Company has a large land package in southwest Greenland, collectively known at the Maniitsoq property. In addition, the Company
has two properties, Post Creek and Halcyon, in Sudbury nickel district of Ontario and a small property, Section 35, in the
Mid-Continental Rift setting of Michigan. A figure showing the locations of all of the company’s properties is displayed
below.
Maniitsoq
The
Greenland properties currently being explored for nickel-copper-copper-PGM sulphides by North American Nickel are exploration
properties without mineral resources or reserves. The Maniitsoq project is centered 100 kilometres north of Nuuk, the capital
of Greenland which is a safe, stable, mining-friendly jurisdiction. The centre of the project is located at 65 degrees 18 minutes
north and 51 degrees 43 minutes west and has an artic climate. It is accessible year-round either by helicopter or by boat from
Nuuk or Maniitsoq, the latter located on the coast approximately 15 kilometres to the west. The deepwater coastline adjacent to
Maniitsoq is typical of Greenland’s southwest coast which is free of pack ice with a year-round shipping season. The optimum
shipping conditions are due to the Irminger current, a tributary of the warming Gulf Stream flowing continuously past the south
west coastline of Greenland. There is no infrastructure on the property; however, the Seqi deepwater pier and a quantified watershed
for hydropower are located peripheral to the project. A location map for the property is given below.
The
Maniitsoq property consists of four exploration licences, No. 2011/54 (2,689 km
2
), No. 2012/28 (296 km
2
),
No. 2018/21 (63 km2) and No 2018/31 (33 km
2
). The property is centered on the 75 kilometre by 15 kilometre Greenland
Norite Belt which hosts numerous high-grade nickel-copper sulphide occurrences associated with mafic and ultramafic intrusions.
Between
1995 and 2011, various companies carried out exploration over portions of the project area. The most extensive work was carried
out by Kryolitselskabet Øresund A/S Company (KØ) who explored the project area from 1959 to 1973. KØ discovered
a number of surface and near surface nickel-copper sulphide occurrences and this work was instrumental in proving the nickel prospectivity
of the Greenland Norite Belt.
The
Company acquired the Maniitsoq project because it has potential for the discovery of significant magmatic sulfide discovery in
a camp-scale belt. The company believed that modern, time-domain, helicopter-borne electromagnetic (EM) systems would be more
effective at detecting nickel sulphide deposits in the rugged terrain of Maniitsoq than previous, older airborne fixed wing geophysical
surveys available to previous explorers. In addition, modern, time domain surface and borehole EM systems could be used to target
mineralization in the sub-surface.
Effective
August 15, 2011, the Company was granted an exploration license, No. 2011/54(the “Sulussugut License”),
by the Bureau of Minerals and Petroleum (“BMP”) of Greenland for exclusive exploration rights of an area located near
Sulussugut, Greenland. The Company paid a license fee of $6 (Danish Krones (“DKK”) 31) upon granting of the Sulussugut
License. The Sulussugut License was valid for 5 years until December 31, 2015, with December 31, 2011 being the first
year providing the Company meets the terms of the license, which includes that specified eligible exploration expenditures must
be made. The application for another 5 year term on the Sulussugut License was submitted to the Greenland Mineral Licence &
Safety Authority (MLSA) which was effective on April 11, 2016, with December 31, 2018 being the eighth year.
The
Greenland MLSA for the years 2018 has adjusted the minimum required exploration expenditures to zero. The accumulated exploration
credits held at the end of 2017, DKK 246,507 (approximately $48,513) can be carried forward until 2020 DKK 85,094, until 2019
DKK 61,109 and until 2018 DKK 59,150. There will be an annual licence fee on the Sulussugut License for year 7 and forward of
approximately DKK 41. Details of required work expenditures and accrued work credits are tabulated and given below.
Sulussugut
License — 2011/54
(All amounts in table are expressed in thousands of DKK)
Exploration Commitment
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
Fixed
amount
|
|
|
310
|
|
|
|
313
|
|
|
|
317
|
|
|
|
—
|
|
|
|
650
|
|
|
|
659
|
|
4841 km
2
of DKK 1.460 per km
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4841 km
2
of DKK 1.490 per km
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3336 km
2
of DKK 7.760 per km
2
|
|
|
25,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2689 km
2
of DKK 7.830 per km
2
|
|
|
|
|
|
|
21,055
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
2689 km
2
of DKK 7.940 per km
2
|
|
|
|
|
|
|
|
|
|
|
21,351
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
2689 km
2
of DKK
16.260 per km
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,723
|
|
|
|
44,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
obligation
|
|
|
26,197
|
|
|
|
21,368
|
|
|
|
21,668
|
|
|
|
—
|
|
|
|
44,374
|
|
|
|
—
|
|
Approved exploration
expenditures
|
|
|
37,349
|
|
|
|
55,509
|
|
|
|
59,150
|
|
|
|
61,109
|
|
|
|
85,094
|
|
|
|
79,604
|
|
Exploration obligation
|
|
|
(26,198
|
)
|
|
|
(21,368
|
)
|
|
|
(21,668
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Credit from previous
year
|
|
|
17,530
|
|
|
|
28,681
|
|
|
|
62,822
|
|
|
|
100,304
|
|
|
|
161,413
|
|
|
|
246,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Credit
DDK
|
|
|
28,681
|
|
|
|
62,822
|
|
|
|
100,304
|
|
|
|
161,413
|
|
|
|
246,507
|
|
|
|
326,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Annual Rate
DDK to CAD
|
|
|
0.1834
|
|
|
|
0.1968
|
|
|
|
0.1901
|
|
|
|
0.1969
|
|
|
|
0.1968
|
|
|
|
0.2053
|
|
The
accumulated exploration credits held at the end of 2018, DKK 326,111 (approximately $66,951) can be carried
forward as follows:
Carry
forward period:
a) DKK
246,507
from 2017 until December 31, 2021
b) DKK
79,604
from 2018 until December 31, 2021
On
the first 5 year license, the Company completed the exploration requirements of an estimated minimum of DKK 83,809 (approximately
$15,808) between the years ended December 31, 2011 to 2015 by incurring $26,115,831 on the Sulussugut License.
In
2018, there was no exploration commitment. The Company completed approved expenditures for 2018 DKK 79,604,
for 2017, DKK 85,094 (approximately, $16,342 and $16,746, respectively). With a credit from 2015 of
DKK 59,150 (approximately $11,250) and credit from 2016 of DKK 61,109 (approximately $12,032), and a commitment of $nil left the
Company with excess credits of DKK 326,111 (approximately $66,951). The Sulussugut License area was not reduced
in 2017 and 2018.
Effective
March 4, 2012, the Company was granted an additional exploration license, No. 2012/28 (the “Ininngui License”),
by the BMP of Greenland for exclusive exploration rights over an area covering a total of 142 square kilometres near Ininngui,
Greenland. The Ininngui License is contiguous with the Sulussugut License. The Company paid a license fee of DKK 32 upon granting
of the Ininngui License. The Ininngui License was valid for 5 years until December 31, 2016, with December 31, 2012
being the first year. The application for another 5 year term on the Ininngui License was submitted to the Greenland Mineral Licence &
Safety Authority (MLSA) which was effective March 3, 2017, with December 31, 2018 being the seventh year.
Details
of required work expenditures and accrued work credits are tabulated and given below.
Ininngui
License - 2012/28
(All amounts in table are expressed in thousands of DKK)
Exploration
Commitment
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
Fixed
amount
|
|
|
155
|
|
|
|
313
|
|
|
|
318
|
|
|
|
323
|
|
|
|
—
|
|
|
|
659
|
|
142
km
2
of DKK 1.490 per km
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
265
km
2
of DKK 1.550 per km
2
|
|
|
411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
265
km
2
of DKK 7.830 per km
2
|
|
|
|
|
|
|
2,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
296
km
2
of DKK 7.940 per km
2
|
|
|
|
|
|
|
|
|
|
|
2,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
296
km
2
of DKK 8.080 per km
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,392
|
|
|
|
|
|
|
|
|
|
296
km
2
of DKK 8.080 per km
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
4,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
obligation
|
|
|
566
|
|
|
|
2,388
|
|
|
|
2,668
|
|
|
|
2,715
|
|
|
|
—
|
|
|
|
—
|
|
Total
Credits Available
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approved
exploration expenditures
|
|
|
2,966
|
|
|
|
5,470
|
|
|
|
6,276
|
|
|
|
6,790
|
|
|
|
9,367
|
|
|
|
10,465
|
|
Exploration
obligation
|
|
|
(576
|
)
|
|
|
(2,388
|
)
|
|
|
(2,668
|
)
|
|
|
(2,715
|
)
|
|
|
—
|
|
|
|
—
|
|
Credit
from previous year
|
|
|
2,512
|
|
|
|
4,902
|
|
|
|
7,984
|
|
|
|
11,592
|
|
|
|
15,667
|
|
|
|
25,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Credit
DDK
|
|
|
4,902
|
|
|
|
7,984
|
|
|
|
11,592
|
|
|
|
15,667
|
|
|
|
25,044
|
|
|
|
35,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Annual Rate DDK to CAD
|
|
|
0.1834
|
|
|
|
0.1968
|
|
|
|
0.1901
|
|
|
|
0.1969
|
|
|
|
0.1968
|
|
|
|
0.2053
|
|
Carry
forward period:
a)
DKK
25,044
from 2017 until December 31, 2021
b)
DKK
10,465
from 2018 until December 31, 2021
On
the first 5 year license, the Company completed the exploration requirements of an estimated minimum of DKK 8,697 (approximately
$1,635) between the years ended December 31, 2012 to 2016 by incurring $2,722 on the Ininngui License.
The Greenland MLSA for the year
2017 and 2018 has
adjusted the minimum required
exploration expenditure to zero. The Company has fulfilled the minimum exploration requirements and the
Ininngui License area was not reduced in 2017 and 2018.
For
both licenses, future required minimum eligible exploration expenses will be adjusted each year on the basis of the change to
the Danish Consumer Price Index.
For
both licenses, at the expiration of the second licence period (years 6-10), the Company may apply for a new 3-year licence for
years 11 to 13. Thereafter, the Company may apply 3 times for additional 3-year licenses for a total of 9 additional years. The
Company will be required to pay additional license fees and will be obligated to incur minimum eligible exploration expenses for
such years.
The
Company may terminate the licenses at any time; however any unfulfilled obligations according to the licenses will remain in force,
regardless of the termination.
During
the period 2011 to 2018, the Company has carried out extensive exploration drilling programs on the Maniitsoq property to search
for Ni-Cu-Co-PGM sulphide deposits. Cumulative exploration expenditures totaled C$62.2 million as of December 31, 2018.
A
NI 43-101 compliant Technical Report and updated 43-101 compliant Technical Report, both completed by J. F. Ravenelle and L. Weiershäuser,
were completed in March 2016 and March 2017, respectively. Both reports were filed on SEDAR.
In
2017, the Company implemented an $11.1M exploration program consisting of 8,767 metres of diamond drilling in 23 holes, two regional
and four detailed induced polarisation (IP) surveys covering 13km
2
, surface and borehole electromagnetic (EM) surveys,
borehole gyro, optical televiewer and physical properties surveys, a comprehensive review of geochemistry and petrology of the
noritic intrusions, a surface geology sampling and mapping program, and 3D modeling of the mineral zones.
Based
on field mapping, prospecting and re-examination of exploration results, the high-MgO parts of the larger Norite Province Intrusions
with proximal zones of mineralization (e.g. P-004, P-058, Imiak Hill Complex occurrences) were identified as a possible source
for the high nickel grade and tenor mineralization. The larger melanorite bdomains have the capacity to host more extensive zones
of breccia and semi-massive sulphide mineralization in association with disseminated sulphides. Although the intrusions are extensively
modified by deformation and metamorphism, the contacts and keels of the larger bodies provided focus to next phase of exploration
work.
Exploration
work in 2018 focussed on targeting the outer contacts and keels of differentiated intrusions containing significant amounts of
melanorite. Work was prioritized intrusions at Fossilik, the Imiak Hill Complex, P-030, P-032, P-008 and Pingo which are believed
to have good potential to host economic accumulations of Ni-Cu-Co-PGM sulphide mineralization.
The
exploration program commenced in June and was completed in September 2018 with 14,288 m of drilling that targeted the roots of
large intrusions with thick intervals of melanorite. The total meterage is an increase of 5,520 m from the 2017 program and surpassed
the initial planned program of 12,500m.
A
small but important intrusion comprising melanorite at the P-008 target south of Fossilik was identified. Two holes (MQ-18-162,
MQ-18-163) were drilled to test the surface EM target and both intersected significant sulphide mineralization. A third hole,
MQ-18-167, followed-up on holes MQ-18-162 and MQ-18-163 and indicate that the zone is more extensive at depth and extends into
the footwall at the north wall of the intrusion. A BHEM survey has identified further targets at depth that were tested with DDH
MQ-18-177. This hole deviated and was drilled outside of the plunge of the mineralization. Selected Drill and assay results are
summarised in Table below.
Summary
of drill and assay results, MQ-18-167.
Target
|
|
Drill
Hole
|
|
Location
|
|
Intercept
|
P-008
|
|
MQ-18-167
|
|
Fossilik
|
|
7.50m
@ 1.26% nickel, 0.24% copper,
|
|
|
|
|
|
|
0.05%
Co and 0.47 g/t Pt+Pd+Au
|
|
|
|
|
|
|
including
|
|
|
|
|
|
|
5.10m
@ 1.68% nickel, 0.29% copper,
|
|
|
|
|
|
|
0.06%
cobalt and 0.63 g/t Pt+Pd+Au
|
Melanorite
is the host for the majority of the highest-grade nickel mineralization comprising heavily disseminated, net-textured, breccia
and massive sulphide mineralization. Targeting of these holes was accomplished using optimized deep-penetrating surface electromagnetic
methods including borehole EM surveys to target the melanorite and keel zones of prioritized intrusions at Fossilik, P-030-31-32,
P-008, Pingo and in the footprint of the Imiak Hill Complex. The extensive program of work has generated the data and samples
required to add significant value to the Maniitsoq database and provides a basis to refine future exploration strategies.
New
Mineral License – Carbonatite and Ikertoq
(Greenland Mineral Exploration Licenses 2018/21and 2018/31)
On
May 4, 2018 the Company was awarded an exploration license (2018/21; “Carbonatite”) over a highly prospective block
of ground to the west of the Fossilik Intrusion in an area which has very limited nickel exploration and contains the Qeqertassaq
carbonatite complex. The Company paid a license fee of $7 (DKK 31) upon granting of the Carbonatite License. The Carbonatite
License is valid for 5 years until December 31, 2022, with December 31, 2018 being the first year.
Details
of required work expenditures and accrued work credits are tabulated and given below.
Carbonatite
License 2018/21
(All amounts in table are expressed in thousands of DKK)
Exploration Commitment
|
|
2017
|
|
|
2018
|
|
Fixed amount
|
|
|
-
|
|
|
|
165
|
|
63 km
2
of DKK 1.650 per km
2
|
|
|
|
|
|
|
104
|
|
|
|
|
|
|
|
|
|
|
Exploration obligation
|
|
|
-
|
|
|
|
269
|
|
|
|
|
|
|
|
|
|
|
Approved exploration expenditures
|
|
|
-
|
|
|
|
10,099
|
|
Exploration obligation
|
|
|
|
|
|
|
-
|
|
Credit from previous year
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Credit
DKK
|
|
|
-
|
|
|
|
9,830
|
|
|
|
|
|
|
|
|
|
|
Average Annual Rate DKK to CAD
|
|
|
|
|
|
|
0.2053
|
|
Carry
forward period:
a) DKK
9,830
from 2018 until December 31, 2021
The
Company may terminate the licenses at any time; however, any unfulfilled obligations according to the licenses will remain in
force, regardless of the termination.
The
work program for 2018 has consisted of compilation, field work, surface sampling for geochemistry, surface EM work in areas with
possible norite-associated mineralization modified by the carbonatite complex and drilling to evaluate the potential for strategic
metals (Nb, Ta, and rare earth elements) in areas outside of the focus areas of historic drilling.
Compilation
work and re-interpretation of historic data for the 15 km2 Qeqertassaq Carbonatite Complex, part of the Greenland Norite Belt,
was commenced on September 10. The purpose was to identify norite-hosted nickel sulphide targets and focus exploration on the
potential for rare and strategic metals. Ground EM surveys were undertaken over targets identified from a 1995 GEOTEM airborne
survey. Two drill holes for a total of 553 m were drilled to test resultant conductive responses for potential nickel targets
intersected stringers of barren pyrrhotite within a carbonate-magnetite host rock in association with a thick interval of magnetite.
A surface rock sampling and drilling program was initiated to assess the strategic metal potential for pyrochlore-hosted tantalum
(Ta) and niobium (Nb). A total of 284 rock samples were collected from a zone of elevated Ta and Nb correlated with historic airborne
radiometric and magnetic anomalies at the margin of the Qeqertassaq Carbonatite Complex. Four holes were also drilled for a total
of 1,305 m to assess this zone. Assay results are pending. A report on the strategic metal potential of the Qeqertassaq carbonatite
was commissioned, and emphasis was placed on understanding the upside potential of the light rare earth element vein system, the
Nb mineralization, and the potential for Ta mineralization is association with soeviite series rocks.
A
second new exploration license (2018/31; “Ikertoq”) was awarded to the Company on May 4, 2018 in an area approximately
110 km north of the Maniitsoq project. This area was intermittently explored by Kryolitselskabet Øresund (“KO”),
Greenland Gold Resources and Northern Shield Resources. As of December 31, 2018, the license was relinquished due to no further
plans to carry exploration work.
Sudbury
nickel properties:
The
Sudbury properties currently being explored by North American Nickel are exploration properties without mineral resources or reserves.
All properties can be readily accessed by paved and/or all-weather gravel roads and have access to water and diesel-power for
exploration purposes. Sudbury is considered a world class nickel district. Multiple Ni-Cu-PGM deposits and past and currently
producing mines are associated with the Sudbury Igneous Complex. Global nickel resources have been estimated at 1648 million tonnes
at a grade of 1.20% nickel. The Sudbury properties have unique geologic characteristics of the Sudbury Basin. Quart Diorite and
Sudbury Breccia, two lithologies that commonly host Sudbury nickel-copper-PGM (platinum group metal) mineralization, have been
identified on the Post Creek property. The Sudbury properties are strategically located near the Whistle Offset Dyke structure
hosting the past-producing Podolsky Cu-Ni-PGM mine owned by KGHM Polska Miedź S.A. (KGHM). A location map for the properties
is given below.
Post
Creek:
The Company entered into an option agreement in April 2010, subsequently amended in March 2013, to acquire rights to
Post Creek Property located within the Sudbury Mining District of Ontario. On August 1, 2015, the company has completed the required
consideration and acquired 100% interest in the property. the Company is obligated to pay advances on the NSR of $10 per annum,
which will be deducted from any payments to be made under the NSR.
The
property is located 35 kilometres east of Sudbury in Norman, Parkin, Alymer and Rathburn townships and consists of 39 unpatented
mining claims in two separate blocks, covering a total area of 912 hectares held by the Company. The center of the property occurs
at UTM coordinates 513000mE, 5184500mN (WGS84, UTM Zone 17N). The Post Creek property lies adjacent to the Whistle Offset Dyke
Structure which hosts the past—producing Whistle Offset and Podolsky Cu-Ni-PGM mines. Post Creek lies along an interpreted
northeast extension of the Whistle Offset Dyke trend. Offset Dykes and Footwall deposits account for a significant portion of
all ore mined in the Sudbury nickel district and, as such, represent favorable exploration targets. Key lithologies are Quartz
Diorite related to Offset Dykes and Sudbury Breccia associated with Footwall deposits.
Previous
operators completed geological, geophysical and Mobile Metal Ion soil geochemical surveys. Highlights of this work included:
|
●
|
A
drill intersection returning 0.48% copper, 0.08% nickel, 0.054 grams/tonne palladium, 0.034 grams/tonne platinum and 0.020
grams/tonne gold over a core length of 0.66 metres; and
|
|
●
|
A
grab sample from broken outcrop which returned 0.83% nickel, 0.74% copper, 0.07% cobalt, 2.24 grams/tonne Pt and 1.05 grams/tonne
Pd.
|
A
NI 43-101 compliant Technical Report was completed by Dr. Walter Peredery, formerly of INCO, in 2011 and subsequently accepted
by the Securities Commission.
During
the period 2011 to 2017, the Company carried out exploration programs comprising ground geophysics (magnetics and electromagnetics),
diamond drilling (1,533 metres in 7 drillholes), borehole electromagnetic surveys, georeferencing of selected claim posts, prospecting,
trenching, geological mapping, sampling and petrographic studies. This work has identified new occurrences of Quartz Diorite (dyke
and Sudbury Breccia, both of which are geologically significant lithologies known to host ore deposits associated with the Sudbury
structure. Ground traverses, trenching and mapping carried out in 2016 outlined a Sudbury Breccia belt of at least 300 metres
by 300 metres in size which lies along the same trend at the Whistle Offset Dyke located on KGHM property to the southwest. These
findings support the potential for the Post Creek property to host both Footwall and Offset Dyke type deposits.
A
two-hole drill program was completed in 2018 with the objectives of assessing magnetic and electromagnetic anomalies within a
corridor of breccias and quartz diorite extending radially away from the Whistle Offset and to provide a platform for downhole
geophysics. Both drill holes encountered a thick sequence of mafic volcanic rocks however quartz diorite, partially melted country
rocks or Footwall-style mineralization were not encountered. DDH PC-18-021 did intersect a thick interval of volcanogenic massive
sulphide-type sphalerite mineralization including:
7.50m
@ 3.55% zinc and 0.82ppm silver including
|
●
|
3.70m
@ 4.66% zinc and 0.58ppm silver and
|
|
●
|
0.8m
@ 10.96% zinc and 3.05ppm silver
|
Multiple
BHEM anomalies were detected both north and south of the zinc mineralization and are potential drill targets.
Hole
PC-18-022 tested the possible strike extension of the Whistle Offset in a broad corridor of Sudbury Breccia and was collared in
an area of anomalous copper values in outcrop within a well-defined ground magnetic anomaly. A thick sequence of mafic volcanic
rocks overprinted with locally developed shear and breccia zones were intersected. One of the shear zones hosted vein-type chalcopyrite
mineralization. A strongly magnetic, highly altered ultramafic unit is responsible for the observed magnetic anomaly.
Location
of the Post Creek VTEM magnetic and electromagnetic (EM) anomalies, 2018 drill holes and significant assay results.
Halcyon
:
The property is located 35 Km NNE of Sudbury in the Parkin and Alymer townships and consists of 53 unpatented mining claims covering
an area of approximately 864 hectares. Halcyon is adjacent to the Post Creek property and is located approximately 2 kilometers
north of the Whistle Offset Dyke structure and the past-producing Podolsky mine of KGHM. Previous operators on the property defined
numerous conductive zones based on induced polarization (IP) surveys with coincident anomalous soil geochemistry. Base and precious
metal mineralization have been found in multiple locations on the property but follow-up work was never done. The former producing
Milnet Mine (nickel-copper-cobalt-platinum) is situated 1 kilometre north of the property.
During
the period 2011 to 2017, the Company carried out a small amount of exploration including ground geophysics (magnetics and electromagnetics),
diamond drilling (301 metres in 1 drillhole), a borehole electromagnetic survey, georeferencing of selected claim posts, prospecting,
geological mapping, sampling and petrographic studies. The single hole located on the southeast corner of the property was drilled
with the purpose of providing geological information and to provide a platform for bore hole pulse EM (“BHPEM”). No
anomalies were detected although quartz diorite breccia and partial melt material with 2-3% disseminated pyrrhotite and chalcopyrite
was intersected over short core lengths. The property is strategically located adjacent to the Company’s Post Creek property,
located immediately to the south, where new occurrences of both Quartz Diorite and Sudbury Breccia have been identified.
As
at the date of this MD&A, the company holds 100% interest in Halcyon Property and is obligated to pay advances on the NSR
of $8 per annum, which will be deducted from any payments to be made under the NSR.
Quetico:
During 2018, the Company acquired 757 claims known as Quetico located within the Sudbury Mining District of Ontario. The
Company incurred total acquisition and exploration related costs of $64.
US
Nickel Property
Section
35
:
on January 4, 2016, the Company made and entered into a 10 year Metallic Minerals Lease (the “Lease”) with the Michigan
Department of Natural Resources for an area covering approximately 320 acres. The terms of the Lease require an annual rental
fee at a rate of US $3.00 per acre for years 1-5 and at a rate of US $6.00 per acre for years 6-10. The Company shall pay a minimum
royalty at a rate of US $10.00 per acre for the 11th year onwards, with an increase of an additional US $5.00 per acre per year
up to a maximum of US $55.00 per acre per year. A production royalty of between 2% - 2.5% is payable from production of minerals
and/or mineral products from an established mining operation area. The Company paid the first year rental fee and the required
reclamation deposit of $14 (US $10). The Department of Natural Resources shall annually review the level of the reclamation deposit
and shall require the amount to be increased or decreased to reflect changes in the cost of future reclamation of the leased premises.
The
Section 35 property is strategically located 6 kilometres northwest of the Lundin Mining Corporation’s Eagle Ni-Cu-PGM mine.
The property was acquired due to its position over a portion of the North Sill which is an ultramafic intrusion interpreted to
be of a similar age and geochemical signature to the intrusion hosting the Eagle Mine. The Company has not yet carried out any
exploration on the property.
ITEM
5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The
following discussion and analysis should be read in conjunction with the financial statements and notes thereto included herein
(see also “Selected Financial Data”). The financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”).
Overview
North
American Nickel is an international mineral exploration and resource development company listed on the TSX Venture Exchange (“TSXV”)
as at May 3, 2011 trading under the symbol NAN. The Company’s principal asset is its Maniitsoq Property, in southwestern
Greenland, a district scale land position. The Company is focussing its resources on exploration and resource development of its
Maniitsoq nickel-copper-cobalt-precious metal sulphide project (“Ni-Co-Co-PM”) but it also has an active program of
project generation in North America and exploration projects at Post Creek and Halcyon in the footwall of the Sudbury Igneous
Complex.
A.
Operating Results
The
Company is an exploration and development stage entity and has not yet achieved profitable operations. The Company has shown losses
for the past several years. These losses result largely from having no revenue and significant exploration and administrative
expenses related to operations.
The
Company will continue in the exploration business and focusing on the development of its camp scale Maniitsoq Project in south-western
Greenland and the Post Creek Property in Sudbury, Ontario.
Net
loss for FY 2018 was $3,022, higher by $143 compared to a loss of $2,879 in FY 2017. The higher loss in FY 2018 was mainly driven
by property investigation costs of $216 in FY 2018 compared to $nil in FY 2017 and higher foreign exchange loss in FY 2018 of
$209 compared to $7 in FY 2017. The higher costs in FY 2018 were offset by lower administrative costs and higher interest income
in FY 2018.
B.
Liquidity and Capital Resources
Since
the Company is organized in Canada, the Company’s December 31, 2018 financial statements have been prepared in accordance
with International Financial Reporting Standards (‘IFRS”).
As
at December 31, 2018, the Company had accumulated losses totaling $29,343 and a working capital of $2,416. The continuation of
the Company is dependent upon the continued financial support of shareholders as well as obtaining additional financing for the
current and subsequent resource projects.
As
noted, these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustment that might arise from uncertainty. The auditors’ report includes an explanatory
paragraph disclosing the Company’s ability to continue as a going concern.
As
at December 31, 2018 the Company had cash of $339, short-term investments of $2,500.
C.
Research and development, patents and licenses, etc.
Not
applicable
D.
Trend information
The
major trends impacting the company and its industry are lack of access to capital, caused by the severe global financial contraction,
and the corresponding contraction of demand for most commodities. However, the long-term nickel market forecasts indicating a
supply deficit developing due to positive developments in the electric vehicle market as well as supply constrains by a protracted
low level of investment in mine expansion, exploration and development of new nickel mine. The Company believes that it is a good
time to acquire nickel exploration and development projects that could be developed assuming conservative long-term nickel prices.
Impact
of Inflation
The
Company believes that inflation had minimal effect on costs related to its exploration activities in the 12 months ending December
31, 2018.
Quantitative
and Qualitative Disclosures about Market Risk
Not
applicable to the Company.
E.
Off-balance sheet arrangements
Not
applicable
F.
Tabular disclosure of contractual obligations
Not
applicable
Critical
Accounting Policies and Estimates
Basis
of preparation and accounting policies
The
financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial
Reporting Interpretations Committee (“IFRIC”).
These
financial statements have been prepared on an accrual basis and are based on historical costs, modified where applicable. The
financial statements are presented in Canadian dollars, unless otherwise noted, which, is the Company’s functional currency.
Significant
estimates and assumptions
The
preparation of financial statements in accordance with IFRS requires the Company to make estimates and assumptions concerning
the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience
and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions
to estimates are adjusted for prospectively in the period in which the estimates are revised.
Estimates
and assumptions where there is significant risk of material adjustments to assets and liabilities in future accounting periods
include the useful lives of equipment, the recoverability of the carrying value of exploration and evaluation assets, fair value
measurements for financial instruments, the recoverability and measurement of deferred tax assets and provisions for restoration
and environmental obligations.
Significant
judgments
The
preparation of financial statements in accordance with IFRS requires the Company to make judgments, apart from those involving
estimates, in applying accounting policies. The most significant judgments in applying the Company’s financial statements
include:
the
assessment of the Company’s ability to continue as a going concern and whether there are events or conditions that may give
rise to significant uncertainty;
●
the classification / allocation of expenditures as exploration and evaluation expenditures or operating expenses;
●
the classification of financial instruments; and
●
the determination of the functional currency of the Company.
Foreign
currency translation
Foreign
currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost
continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported
at the exchange rate at the date when fair values were determined.
Exchange
differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in
the statement of comprehensive income in the period in which they arise, except where deferred in equity as a qualifying cash
flow or net investment hedge.
Exchange
differences arising on the translation of non-monetary items are recognized in other comprehensive income in the statement of
comprehensive income to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive
income. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit
or loss.
Exploration
and evaluation assets
Exploration
and evaluation assets include the costs of acquiring licenses, costs associated with exploration and evaluation activity, and
the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination. Exploration and
evaluation expenditures are initially capitalized. Costs incurred before the Company has obtained the legal rights to explore
an area are recognized in profit or loss.
Government
tax credits received are recorded as a reduction to the cumulative costs incurred and capitalized on the related property.
Exploration
and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial
viability, and (ii) facts, events and circumstances suggest that the carrying amount exceeds the recoverable amount.
Once
the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable,
exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified
to mining property and development assets within equipment.
Recoverability
of the carrying amount of any exploration and evaluation assets is dependent on successful development and commercial exploitation,
or alternatively, sale of the respective areas of interest.
The
Company may occasionally enter into farm-out arrangements, whereby it will transfer part of the interest, as consideration, for
an agreement by the farmee to meet certain exploration and evaluation expenditures which would have otherwise been undertaken
by the Company. The Company does not record any expenditures made by the farmee on its behalf. Any cash consideration received
from the agreement is credited against the costs previously capitalized to the mineral interest given up by the Company, with
any excess consideration accounted for in profit.
When
a project is deemed to no longer have commercially viable prospects to the Company, exploration and evaluation expenditures in
respect of that project are deemed to be impaired. As a result, those exploration and evaluation expenditure costs, in excess
of estimated recoveries, are written off to the statement of comprehensive loss/income.
Restoration
and environmental obligations
The
Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of
long-term assets, when those obligations result from the acquisition, construction, development or normal operation of the assets.
The net present value of future restoration cost estimates is capitalized to exploration and evaluation assets along with a corresponding
increase in the restoration provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value
of money are used to calculate the net present value. The restoration asset will be depreciated on the same basis as other mining
assets.
These
changes are recorded directly to mining assets with a corresponding entry to the restoration provision. The Company’s estimates
are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates.
Changes
in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to profit and loss
for the period.
The
net present value of restoration costs arising from subsequent site damage that is incurred on an ongoing basis during production
are charged to profit or loss in the period incurred.
The
costs of restoration projects included in the provision are recorded against the provision as incurred. The costs to prevent and
control environmental impacts at specific properties are capitalized in accordance with the Company’s accounting policy
for exploration and evaluation assets.
Impairment
of assets
Impairment
tests on intangible assets with indefinite useful economic lives are undertaken annually at the financial year-end. Other non-financial
assets, including exploration and evaluation assets are subject to impairment tests whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount,
which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly.
Where
it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s
cash-generating unit, which is the lowest group of assets in which the asset belongs for which there are separately identifiable
cash inflows that are largely independent of the cash inflows from other assets.
An
impairment loss is charged to the profit or loss, except to the extent they reverse gains previously recognized in other comprehensive
loss/income.
Financial
instruments
The
Company classifies its financial instruments in the following categories: at fair value through profit or loss, loans and receivables,
held-to-maturity investments, available-for-sale and financial liabilities. The classification depends on the purpose for which
the financial instruments were acquired. Management determines the classification of its financial instruments at initial recognition.
Financial
assets are classified at fair value through profit or loss when they are either held for trading for the purpose of short-term
profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch
or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis
in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with
changes in carrying value being included in profit or loss.
The
Company has classified cash, short-term investments and receivables as loans and receivables. Loans and receivables are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at
amortized cost. They are included in current assets, except for maturities greater than 12 months after the end of the reporting
period. These are classified as non-current assets.
Held-to-maturity
investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company’s
intention to hold these investments to maturity. They are subsequently measured at amortized cost. Held-to-maturity investments
are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting
period.
Available-for-sale
financial assets are non-derivative financial assets that are designated as available-for-sale or are not suitable to be classified
as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments and are subsequently
measured at fair value. These are included in current assets. Unrealized gains and losses are recognized in other comprehensive
income, except for impairment losses and foreign exchange gains and losses.
The
Company has classified its trade payable as other financial liabilities. Subsequent to initial recognition, trade payable and
are measured at amortized cost using the effective interest rate method.
Regular
purchases and sales of financial assets are recognized on the trade-date — the date on which the group commits to purchase
the asset.
Financial
assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the
Company has transferred substantially all risks and rewards of ownership.
At
each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In
the case of available-for-sale financial instruments, a significant and prolonged decline in the value of the instrument is considered
to determine whether an impairment has arisen.
Loss
per share
The
Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this
method the dilutive effect on loss per common share is recognized on the use of the proceeds that could be obtained upon exercise
of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average
market price during the period.
Basic
loss per common share is calculated using the weighted average number of common shares outstanding during the period and does
not include outstanding options and warrants. Dilutive loss per common share is not presented differently from basic loss per
share as the conversion of outstanding stock options and warrants into common shares would be anti-dilutive.
Income
taxes
Income
tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in net income except to the extent
that it arises in a business combination, or from items recognized directly in equity or other comprehensive loss/income.
Current
income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted,
at the reporting date, in the countries where the Company operates and generates taxable income.
Current
income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive
income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect
to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred
income tax is provided using the asset and liability method of temporary differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for financial reporting purposes.
The
carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent
that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to
be utilized.
Deferred
income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized
or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the
reporting period.
Deferred
income tax assets and deferred income tax liabilities are offset, only if a legally enforceable right exists to set off current
tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same
taxation authority.
Share-based
payments
Where
equity-settled share options are awarded to employees, the fair value of the options at the date of grant is recognized over the
vesting period. Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to
vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number
of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the
options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these non-vesting
and market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition
or where a non-vesting condition is not satisfied.
Where
the terms and conditions of options are modified, the increase in the fair value of the options, measured immediately before and
after the modification, is also recognized over the remaining vesting period.
Where
equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received. Amounts
related to the issuance of shares are recorded as a reduction of share capital.
When
the value of goods and services received in exchange for the share-based payment cannot be reliably estimated, the fair value
is measured by use of a valuation model. The expected life used in the model is adjusted, based on management’s best estimate,
for the effects of non-transferability, exercise restrictions, and behavioural considerations.
All
equity-settled share-based payments are reflected in share-based payments reserve, until exercised. Upon exercise shares are issued
from treasury and the amount reflected in share-based payments reserve is credited to share capital along with any consideration
paid.
Share
capital
The
Company’s common shares, preferred shares, share warrants and flow-through shares are classified as equity instruments.
Incremental
costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.
Proceeds
received on the issuance of units, consisting of common shares and warrants are allocated to share capital.
Future
Accounting Changes
The
Company has not early adopted these revised standards and is currently assessing the impact that these standards will have on
its financial statements.
Other
accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are
either not applicable or are not expected to have a significant impact on the Company’s financial statements.
New
standard IFRS 16 “Leases”
IFRS 16 replaces current
guidance in IAS 17. Under IAS 17, lessees were required to make a distinction between a
finance
lease (on the balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognize a lease liability
reflecting future lease payments and a “right-of-use asset” for virtually all lease contracts. The IASB has included
an optional exemption for certain short-term leases and leases of low value assets, however this exemption can only be applied
by lessees. The standard applies to annual periods beginning on or after January 1, 2019, with earlier application permitted.
The adoption of this standard will not result in any impact to the Company’s financial statements.
IFRIC
23 – “Uncertainty over Income Tax Treatments”
In
June 2017, the IFRS Interpretations Committee of the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (IFRIC 23).
The interpretation provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in
which there is uncertainty over income tax treatments. The Interpretation is applicable for annual periods beginning on or after
January 1, 2019. Earlier application is permitted. The Interpretation requires: (a) an entity to contemplate whether uncertain
tax treatments should be considered separately, or together as a group, based on which approach provides better predictions of
the resolution; (b) an entity to determine if it is probable that the tax authorities will accept the uncertain tax treatment;
and (c) if it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainty based on the most
likely amount or expected value, depending on whichever method better predicts the resolution of the uncertainty.
The
adoption of these standards and interpretations is not expected to have a material effect on the Company’s future results
and financial position.
Amendments
to References to the Conceptual Framework in IFRS Standards
On
March 29, 2018 the International Accounting Standards Board (“IASB”) issued a revised version of its Conceptual Framework
for Financial Reporting (the Framework), that underpins IFRS Standards. The IASB also issued Amendments to References to the Conceptual
Framework in IFRS Standards (the Amendments) to update references in IFRS Standards to previous versions of the Conceptual Framework.
Both documents are effective from January 1, 2020 with earlier application permitted.
Some
Standards include references to the 1989 and 2010 versions of the Framework. The IASB has published a separate document which
contains consequential amendments to affected Standards so that they refer to the new Framework, with the exception of IFRS 3
Business Combinations which continues to refer to both the 1989 and 2010 Frameworks. The Company does not intend to adopt the
Amendments in its financial statements before the annual period beginning on January 1, 2020. The extent of the impact of the
change has not yet been determined.
IAS
1 - Presentation of Financial Statements and IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
In
October 2018, the IASB issued amendments to International Accounting Standard (“IAS”) 1, Presentation of Financial
Statements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The amendments are to clarify the definition
of ‘material’ and to align the definition used in the Conceptual Framework and the standards themselves. The amendments
are effective January 2020. The Company is evaluating the impact of the adoption of these amendments.
ITEM
6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
It
should be noted that the management discussed below is primarily involved with the Company’s current activities. As the
Company concludes an acquisition or merger, or embarks on any other type of project, additional personnel with differing areas
of expertise will be utilized. Directors are elected annually by a majority vote of the shareholders and hold office until the
next general meeting of the shareholders. Officers are appointed by, and serve at the discretion of, the board of directors. The
names, place of residence, positions within the Company and the principal occupations of the directors and senior officers of
the Company are set out below.
A.
Directors and senior management.
Name,
Municipality of Residence
Principal Occupation and Position
and Position with the Corporation
|
|
Age
|
|
During
the Past Five Years
|
|
|
|
|
|
Douglas
E. Ford
West Vancouver,
B.C. Director
|
|
55
|
|
Director
since September 10, 1992; General Manager of Dockside Capital, a private merchant banking and venture capital firm, from 1987
to present.
|
|
|
|
|
|
Keith
Morrison
Burlington
, On
Director, Chief Executive Officer
|
|
59
|
|
Director
of Era Resources Inc. 2011-2017, Non-Executive Chairman of Security Devices International Inc. 2014-2017, Non-Executive
Chairman of Osgood Mountain Gold Ltd. August 2016 — 2017, Non-Executive chairman of ZEN Graphene Solution Ltd. 2018-2018.
|
|
|
|
|
|
Mark
Fedikow
Winnipeg, MB
President
|
|
66
|
|
President
of Mount Morgan Resources Ltd. 2001 — present
Director and VP of Exploration Services for VMS Ventures Inc. 2008 — April 2015, Director
and VP of Exploration IMetal Resources Inc. 2004-Present.
|
|
|
|
|
|
Janet Huang
NingDe, China
Director
|
|
41
|
|
Head of Internal Audit for Contemporary Amperex
Technology Limited (CATL) 2018-Present Investment Manager of CATL, 2016-2018
|
|
|
|
|
|
Gilbert
Clark
Le Rouret, France
Director
|
|
49
|
|
Managing
Director 2003 - 2014 of European Mining Services, Private Mining Consultancy, Consultant Geologist with The Sentient Group
2010 - 2013, Senior Investment Advisor and Director of Sentient Asset Management Canada September 2013-2016, Director of North
American Nickel May 2012 - Present, Private Mining & Mining Finance Consultant January 2017 — Present.
|
|
|
|
|
|
John
Sabine
Toronto, On
Director, Chairman
|
|
73
|
|
Counsel
to Bennett Jones LLP 2013-Present, Counsel to Dentons LLP 2001-2013, Director of Lipari Energy Inc. 2011-2013, Uranium One
Inc. 2013-2015, Algold Resources 2013-Present, and Seabridge Gold Inc. 2014-Present, Chairman, North American Nickel Inc.
2014-Present.
|
|
|
|
|
|
Christopher
Messina
New York, NY
Director
|
|
47
|
|
Advisor
to a number of technology companies in the big data analytics, artificial intelligence, shipping, commodities and cyber security
industries.
|
|
|
|
|
|
Sarah-Wenjia
Zhu
Montreal, QC
Chief Financial Officer
|
|
44
|
|
CFO
since May 22, 2018, North American Nickel Inc., formerly an investment manager at The Sentient Group 2009-2017; Equity analyst/associate
at PE fund and bank 2007-2009; Deloitte China 1998-2003
|
B.
Compensation.
Management
compensation is determined by the board of directors based on competitive prices for services provided. During the year ended
December 31, 2018, directors and officers, including private companies controlled by directors and officers, as a group, paid
or accrued a total of $747 in management fees, paid or accrued a total of $181 in salaries. See “Item 7. Major Shareholders
and Related Party Transactions” for more detail on fees paid to members of management or to entities owned by them.
For
the year ended December 31, 2018, the Company paid $131 in compensation to Directors for acting as Directors. The Company does
not have any pension or retirement plans, nor does the Company compensate its directors and officers by way of any material bonus
or profit sharing plans. Directors, officers, employees and other key personnel of the Company may be compensated by way of stock
options.
C.
Board practices.
Pursuant
to the provisions of the
Company Act
(BC), the Company’s directors are elected annually at the regularly schedules
annual general meeting of shareholders. Each elected director is elected for a one-year term unless he resigns prior to the expiry
of his term.
The
Company has no arrangements in place for provision of benefits to its directors or upon their termination.
The
Board has five committees in place:
Audit
Committee is made-up of Douglas Ford (Chair), Christopher Messina and Gilbert Clark. The Audit Committee is an operating committee
of the board of directors responsible for the oversight of financial reporting and disclosure. On May 2, 2006, the Company’s
board of directors adopted a new charter for the Audit Committee.
Compensation
Committee is made up of Christopher Messina (Chair), Douglas Ford and Gilbert Clark. In addition to salary, the compensation committee
determines the level of stock option compensation and stock warrants granted within the corporation.
Safety
Committee is made up of Keith Morrison (Chair), Doug Ford, Gilbert Clark. The purpose of the Safety Committee is to help prevent
injury and illness on the job; increase awareness of health and safety issues among workers, supervisors, and managers; and develop
strategies to make the work environment safe and healthy.
Technical
Oversight Committee is made up of Gilbert Clark (Chair) and Mark Fedikow. The Technical Oversight Committee provides general oversight
and support to the Geological team and identifies technical issues and tasks necessary to support the activities of the Company.
CSR
committee is made of Keith Morrison and Mark Fedikow. The CSR committee is appointed to promote a culture that emphasizes and
sets high standards for corporate social responsibility and reviews corporate performance against those standards.
D.
Employees.
Effective
at December 31, 2018 the Company had seven salaried employees.
E.
Share ownership.
A
total of ten percent (10%) of the common shares of the Company, outstanding from time to time, are reserved for the issuance of
stock options pursuant to the Company’s Incentive Stock Option Plan. During the year 6,425,000 stock options were granted
to directors, consultants and employees. Other information on ownership is contained in the table below.
ITEM
7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.
A.
Major shareholders.
The
following table sets forth certain information regarding beneficial ownership of the Company’s shares at December 31, 2018
by (i) each person who is known to own beneficially more than 5% of the Company’s outstanding Common Stock, (ii) each of
the Company’s directors and executive officers and (iii) all current directors and executive officers as a group. The table
does not reflect common shares held of record by depositories but does include currently exercisable options and warrants which
are included in the calculation of percentage of class ownership for each individual holder. As of December 31, 2018, there were
787,928,500 common shares issued and outstanding, 590,931 preferred shares outstanding, 25,945,500 exercisable options, 257,972,836
warrants which fully diluted is 1,072,437,767.
Name
of Beneficial Owner
|
|
Amount
of Shares
|
|
|
Percent
|
|
Principal
Holders
|
|
|
|
|
|
|
|
|
Sentient Group GP IV
|
|
|
369,809,820
|
|
|
|
46.93
|
%
|
Contemporary Amperex Technology Ltd.
(CATL)
|
|
|
200,000,000
|
|
|
|
25.38
|
%
|
Officers
and Directors
|
|
|
|
|
|
|
|
|
Douglas Ford
|
|
|
557,600
|
(1)
|
|
|
|
|
Keith Morrison
|
|
|
1,033,333
|
|
|
|
|
|
Mark Fedikow
|
|
|
2,517,666
|
(2)
|
|
|
|
|
Gilbert Clark
|
|
|
170,046
|
|
|
|
|
|
John Sabine
|
|
|
1,043,942
|
|
|
|
|
|
Christopher Messina
|
|
|
2
60,000
|
|
|
|
|
|
Sarah-Wenjia Zhu
|
|
|
40,000
|
|
|
|
|
|
All Officers and
Directors as a Group (8 persons)
|
|
|
5,622,587
|
|
|
|
0.71
|
%
|
(1)
Includes 422,000 shares held through B.W.N. Oil Technologies Inc., 135,600 shares held through Dockside Capital Group Inc.
(2)
Includes 1,910,000 shares held through Lee River Resources Ltd.
During
2018, the Company closed a non-brokered private placement equity financing of 233,333,333 units at a price of $0.075 per unit
and raised aggregate gross proceeds of $17,500. The Company incurred total share issuance costs of $579, of which $250 is recorded
in trade payables at December 31, 2018.
B.
Related party transactions.
Related
party transactions were in the normal course of business and have been recorded at the exchange amount which is the fair value
agreed to between the parties. Amounts due to related parties are unsecured, non-interest bearing and without specific terms of
repayment.
Related
party balances - The following amounts due to related parties are included in trade payables and accrued liabilities
|
|
December
31,
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Directors
and officers of the Company
|
|
$
|
1
|
|
|
$
|
42
|
|
|
$
|
2
|
|
Companies
controlled by directors of the Company
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
1
|
|
|
$
|
42
|
|
|
$
|
2
|
|
These
amounts are unsecured, non-interest bearing and have no fixed terms of repayment.
Related
party transactions —
During
the year ended December 31, 2018, the Company recorded $174 (2017 - $244), (2016 - $347) in fees charged by a legal firm
in which the Company’s chairman is a consultant.
During
the year ended December 31, 2018, the Company recorded $Nil (2017 - $Nil) (2016 - $16) in rent and utilities expense to
VMS Ventures Inc. a company that was a significant shareholder and related through common directors, which was included in general
and administrative expense.
(a)
Key management personnel are defined as members of the Board of Directors and senior officers.
Key
management compensation was:
|
|
December
31, 2018
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
Geological consulting fees
— expensed
|
|
|
104
|
|
|
|
35
|
|
|
|
6
|
|
Geological consulting fees — capitalized
|
|
|
18
|
|
|
|
178
|
|
|
|
44
|
|
Management fees — expensed
|
|
|
747
|
|
|
|
749
|
|
|
|
756
|
|
Salaries - expensed
|
|
|
181
|
|
|
|
128
|
|
|
|
103
|
|
Share-based payments
|
|
|
192
|
|
|
|
358
|
|
|
|
186
|
|
Total
|
|
|
1,242
|
|
|
|
1,448
|
|
|
|
1,095
|
|
a)
Transactions with Sentient
On
April 19, 2018, Sentient subscribed for 13,333,333 units of the private placement for a total purchase price of $1,000. As of
December 31, 2018, Sentient beneficially owns, or exercises control or direction over 369,809,820 common shares constituting approximately
46.93% of the currently issued and outstanding shares of the Company.
On
August 15, 2017, Sentient subscribed for a total of 38,666,666 units under the private placement equity financing transaction
for a total net proceeds of $2,900. As part of the subscription, Sentient was granted 19,333,333 common share purchase warrants
exercisable at $0.12 until August 15, 2019.
On
June 8, 2017, Sentient acquired 94,666,666 units in the equity financing as described in Note 10 for net proceeds of $7,100. As
part of the Offering, Sentient was granted 47,333,333 common share purchase warrants exercisable at $0.12 until June 8, 2019.
As
of December 31, 2017, Sentient beneficially owns 356,476,487 common shares constituting approximately 64.27% of the currently
issued and outstanding Common Shares.
b)
Transaction with CATL
Contemporary
Amperex Technology Limited (“CATL”) subscribed for 200,000,000 units of the private placement for a total purchase
price of $15,000. At December 31, 2018, CATL beneficially owns, or exercises control or direction over approximately 25.38% of
the currently issued and outstanding shares of the Company. As per the subscription agreement, CATL has pre-emptive rights and
the right to nominate one director to the board of directors of the Company.
C.
Interests of experts and counsel
Not
required.
ITEM
8. FINANCIAL INFORMATION
A.
Consolidated Statements and Other Financial Information
See
Item 17 and our financial statements and accompanying notes beginning on page F-1.
B.
Significant Changes
The
Company is not aware of any significant change since December 31, 2018 that is not otherwise reported in this filing.
ITEM
9. THE OFFER AND LISTING
Effective
December 21, 2006 our common shares became quoted on the United States OTC Bulletin Board, under the symbol “WSCRF”.
On May 30, 2011 the common shares of the Company began trading under the symbol “NAN” on the TSX-V Venture Exchange.
The table below sets forth the high and low prices expressed in Canadian dollars on the TSX-V and in United States dollars on
the OTC in the United States for the Company’s common shares for the past five years, for each quarter for the last two
fiscal years, and for the last six months. Note this trading data does not take into effect the 2-old for 1-new reverse split
effected on April 20, 2010.
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
|
(Canadian
Dollars)
|
|
|
(United
States Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Last
Five Fiscal Years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
0.085
|
|
|
|
0.030
|
|
|
|
0.075
|
|
|
|
0.020
|
|
2017
|
|
|
0.095
|
|
|
|
0.065
|
|
|
|
0.076
|
|
|
|
0.043
|
|
2016
|
|
|
0.145
|
|
|
|
0.065
|
|
|
|
0.11
|
|
|
|
0.05
|
|
2015
|
|
|
0.28
|
|
|
|
0.08
|
|
|
|
0.23
|
|
|
|
0.06
|
|
2014
|
|
|
0.23
|
|
|
|
0.22
|
|
|
|
0.209
|
|
|
|
0.209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter ended December 31, 2018
|
|
|
0.055
|
|
|
|
0.030
|
|
|
|
0.040
|
|
|
|
0.020
|
|
Third Quarter ended September 30, 2018
|
|
|
0.075
|
|
|
|
0.050
|
|
|
|
0.061
|
|
|
|
0.038
|
|
Second Quarter ended June 30, 2018
|
|
|
0.085
|
|
|
|
0.060
|
|
|
|
0.065
|
|
|
|
0.043
|
|
First Quarter ended March 31, 2018
|
|
|
0.085
|
|
|
|
0.070
|
|
|
|
0.075
|
|
|
|
0.055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter ended December 31, 2017
|
|
|
0.095
|
|
|
|
0.065
|
|
|
|
0.076
|
|
|
|
0.050
|
|
Third Quarter ended September 30, 2017
|
|
|
0.085
|
|
|
|
0.065
|
|
|
|
0.071
|
|
|
|
0.050
|
|
Second Quarter ended June 30, 2017
|
|
|
0.085
|
|
|
|
0.065
|
|
|
|
0.066
|
|
|
|
0.043
|
|
First Quarter ended March 31, 2017
|
|
|
0.095
|
|
|
|
0.075
|
|
|
|
0.071
|
|
|
|
0.054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Last Six
Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 2019
|
|
|
0.025
|
|
|
|
0.020
|
|
|
|
0.025
|
|
|
|
0.013
|
|
February 2019
|
|
|
0.045
|
|
|
|
0.025
|
|
|
|
0.033
|
|
|
|
0.020
|
|
January 2019
|
|
|
0.045
|
|
|
|
0.030
|
|
|
|
0.037
|
|
|
|
0.020
|
|
December 2018
|
|
|
0.050
|
|
|
|
0.030
|
|
|
|
0.036
|
|
|
|
0.020
|
|
November 2018
|
|
|
0.050
|
|
|
|
0.045
|
|
|
|
0.040
|
|
|
|
0.031
|
|
October 2018
|
|
|
0.055
|
|
|
|
0.045
|
|
|
|
0.040
|
|
|
|
0.037
|
|
The
closing price of the Company’s common shares as reported by the TSX-V on December 31, 2018 was C$0.03. The closing price
of the Company’s common shares as reported by the OTCbb on December 31, 2018 was US$0.02.
The
Company’s common shares are issued in registered form. Computershare Investor Services Inc. is the registrar and transfer
agent for the Company’s common shares.
The
Company has no outstanding securities not listed on a marketplace other than incentive stock options and warrants. Since the beginning
of the most recently completed financial year, stock options to purchase an aggregate 6,425,000 common shares were granted. The
following table outlines the detail of each grant:
Number
of Options
|
|
|
Exercise
Price
|
|
|
Grant
Date
|
|
|
|
|
|
(CDN
$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,725,000
|
|
|
$
|
0.12
|
|
|
February 28, 2018
|
|
500,000
|
|
|
$
|
0.12
|
|
|
May 1, 2018
|
|
200,000
|
|
|
$
|
0.12
|
|
|
May 4, 2018
|
Since
the beginning of the most recently completed financial year, warrants issued to purchase an aggregate 116,666,664 common shares
were issued. The following table outlines the detail of each issuance:
Number
of Warrants
|
|
|
Exercise
Price
|
|
|
Grant
Date
|
|
|
|
|
|
(CDN
$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,666,664
|
|
|
$
|
0.12
|
|
|
April 19, 2018
|
ITEM
10. ADDITIONAL INFORMATION
A.
Share capital
Not
required
B.
Memorandum and articles of association
1.
|
The
Company was incorporated as Rainbow Resources Ltd. September 20, 1983 under certificate of incorporation no. 268952 in the
Province of British Columbia Canada. The name was changed to Widescope Resources Ltd. May 1 1984, to Gemini Technology Inc.
September 13 1985, to International Gemini Technology Inc. September 23 1993, and to Widescope Resources Inc., effective July
12, 2006. The name was subsequently changed to North American Nickel Inc., effective April 19, 2010. No objects and purposes
are described.
|
|
|
2.
|
If
a director has a material interest in a matter subject to a vote, he must declare it and abstain from voting, or have his
vote not counted, except for certain specific exclusions which include setting director compensation. There are no restrictions
on directors issuing debt however shareholder approval may be required in connection with convertible debt or other debt driven
requirements to issue shares. There is no retirement age or share ownership requirement for directors.
|
|
|
3.
|
Dividends
are declared by directors and subject to any special rights, paid to all holders of shares in a class according to the number
of shares held. Voting rights are one vote per share. Directors stand for election every year at the annual meeting. Shareholders
have no rights to share directly in the company’s profits. Subject to prior claims of creditors and preferred shareholders,
common shareholders participate in any surplus in the event of liquidation according to the number of shares held. The Company
may redeem shares by directors’ resolution in compliance with applicable law unless the company is insolvent or may
become insolvent by doing so. It must make its offer pro rata to every member who holds a class, subject to applicable stock
exchange rules or company act provisions. The directors have wide discretion. Shareholders have no liability for further capital
calls. No discriminatory provisions, against an existing or prospective shareholder of a substantial number of shares, are
imposed by the articles.
|
4.
|
Rights
of holders of any class of shares can only be changed with their consent, and in accordance with the company act. Consent
must be in writing by the holders or by a three fourths majority of a vote of the holders, and by the consent of the British
Columbia Securities Commission.
|
|
|
5.
|
A
notice convening an annual general or special meeting must specify the place, date, hour, and in the case of a special meeting,
the general nature of the special business, and must be given in accordance with the company act. There are no special conditions
outlining rights of admission.
|
|
|
6.
|
There
are no limitations on rights to own securities.
|
|
|
7.
|
There
are no provisions to delay, defer, or prevent a change in control.
|
|
|
8.
|
Nothing
in the articles requires ownership disclosure.
|
|
|
9.
|
Not
applicable.
|
|
|
10.
|
Not
applicable.
|
C.
Material contracts
On
December 23, 2009, the Company executed a letter of intent whereby the Company has an option to acquire the mineral claim known
as the Post Creek Property located within the Sudbury Mining District of Ontario. The Company paid a non-refundable deposit of
$8. On April 5, 2010, the Company entered into an option agreement to acquire rights to Post Creek Property. On March 12, 2013,
the Post Creek Property Option Agreement was amended, in order to acquire 100% working interests in the property, subject to certain
net smelter return royalties (“NSR”) and advance royalty payments the Company agreed to the following amended consideration,
which has been met, cash payments totalling $138 and the issuance of 1,000,000 common shares. The Company has exercised its option
on Post Creek and as of August 1, 2015, the Company is obligated to pay advances on the NSR of $10 per annum, which will be deducted
from any payments to be made under the NSR
On
April 5, 2010, the Company entered into an option agreement to acquire rights to Halcyon Property. On March 12, 2013, the Halcyon
Property Option Agreement was amended. In order to acquire up to a 100% working interest in the property, subject to certain net
smelter return royalties (“NSR”) and advance royalty payments the Company agreed to the following amended consideration,
which has been met, cash payments totalling $120 and the issuance of 700,000 common shares. Further, commencing on the amended
date of August 1, 2015, if the Company exercises its option, the Company will be obligated to pay advances on the NSR of $8 per
annum, which will be deducted from any payments to be made under the NSR.
On
August 15, 2011, the Company was granted an exploration license (the “Sulussugut License”) by the Bureau of Minerals
and Petroleum (“BMP”) of Greenland for exclusive exploration rights of an area located near Sulussugut, Greenland.
The Company paid a license fee of $5,742 (Danish Krones (“DKK”) 31) upon granting of the Sulussugut License. The Sulussugut
License was valid for 5 years until December 31, 2015, with December 31, 2011 being the first year providing the Company meets
the terms of the license, which includes that specified eligible exploration expenditures must be made. The application for another
5-year term on the Sulussugut License was submitted to the Greenland Mineral Licence & Safety Authority (MLSA) which was effective
on April 11, 2016, with December 31, 2018 being the eighth year.
On
March 4, 2012, the Company was granted an additional exploration license (the “Ininngui License”) by the BMP of Greenland
for exclusive exploration rights over an area covering a total of 142 square kilometres. The license is located near Ininngui,
Greenland. The Company paid a license fee of DKK 32 upon granting of the Ininngui License. The Ininngui License is valid for 5
years until December 31, 2016, with December 31, 2012 being the first year. The Ininngui License is contiguous with the Sulussugut
License.The application for another 5-year term on the Ininngui License was submitted to the Greenland Mineral Licence & Safety
Authority (MLSA), which was effective March 14, 2017, with December 31, 2018 being the seventh year.
In
conjunction with the granting of the Sulussugut License, on August 12, 2011, the Company entered into an arm’s length Intellectual
Property and Data Acquisition Agreement (the “IP Acquisition Agreement”) with Hunter Minerals Pty Limited (“Hunter”)
and Spar Resources Pty Limited (“Spar”). Pursuant to the IP Acquisition Agreement, Hunter and Spar agreed to sell
the IP Rights to the Company in consideration for the Company paying $300 in cash ($150 to each of Hunter and Spar which is paid)
and the issuing of 12,960,000 share purchase warrants, 6,480,000 to each of Hunter and Spar exercisable for a period of five years
expiring on August 30, 2016. The warrants were exercisable at the following prices, 4,750,000 of the warrants are at a price of
$0.50 per share, 4,750,000 of the warrants are at a price of $0.70 per share and 3,460,000 of the warrants are at a price of $1.00
per share. The warrants were subject to an accelerated exercise provision in the event the Company relinquished its interests
in the Maniitsoq Licenses or any other mineral titles held within a defined area of interest without receiving consideration for
such relinquishment. The granted warrants were recorded at a fair value of $1,813 using the Black-Scholes option-pricing model.
As of August 30, 2016 the warrants expired unexercised and the Company has reversed the fair value of $1,813 to deficit. Granting
to each of Hunter and Spar or their designates a 1.25% net smelter returns royalty, subject to rights of NAN to reduce both royalties
to a 0.5% net smelter returns royalty upon payment to each of Hunter and Spar (or their designates) of $1,000 on or before the
60th day following a decision to commence commercial production on the mineral properties. On August 30, 2011 the Company issued
200,000 common shares at $0.14 per share for a value of $28 as a finder’s fee on the Greenland project.
On
January 4, 2016, the Company made and entered into a 10 year Metallic Minerals Lease with the Michigan Department of Natural Resources
for an area covering approximately 320 acres. Under the terms of the lease, an annual rental fee will be required at a rate of
US $3.00 per acre per lease for years 1-5 and US $6.00 per acre per lease year for the years 6-10. A minimum royalty of US $10
per acre is due for the eleventh year of the lease and increases by $US 5 per acre through to the twentieth year. For the twentieth
year of the lease and thereafter for the life of the lease, the minimum royalty is US $55 per acre per year.
The
Company paid the first-year rental fee and the required bond of US $10. The Department of Natural Resources shall annually review
the level of the performance bond and shall require the amount of the bond to be increased or decreased to reflect changes in
the cost of future reclamation of the leased premises.
D.
Exchange Controls
This
summary is of a general nature only and is not intended to be, and should not be interpreted as, legal advice to any prospective
purchaser. Accordingly, prospective purchasers of the Company’s shares should consult with their own advisors with respect
to their individual circumstances.
There
are no laws or governmental decrees or regulations in Canada that restrict the export or import of capital, or which affect the
remittance of dividends, interest or other payments to holders of the Company’s securities who are not residents of Canada,
other than withholding tax requirements. Reference is made to “Item 7. Taxation”.
There
are no limitations imposed by the laws of Canada, the laws of Alberta or by the charter or other governing documents of the Company
on the right of a non-resident to hold or vote common shares of the Company, other than as provided in the Investment Canada Act
(the “Investment Act”) and the potential requirement for a Competition Act Review.
The
following summarizes the principal features of the Investment Act and the Competition Act Review for a non-resident who proposes
to acquire common shares. This summary is of a general nature only and is not intended to be, nor is it, a substitute for independent
advice from an investor’s own advisor. This summary does not anticipate statutory or regulatory amendments.
The
Canadian Investment Act
The
Canadian Investment Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof,
corporation, partnership, trust or joint venture that is not a “Canadian” as defined in the Investment Act (a “non-Canadian”),
unless, after review, the minister responsible for the Investment Act (the “Minister”) is satisfied that the investment
is likely to be of a net benefit to Canada. Under the Investment Act, a United States citizen qualifies as a “World Trade
Organization Investor.” Subject to the restrictions noted below, an investment in a Canadian business by a World Trade Organization
Investor would be reviewable under the Investment Act only if it is an investment to acquire control of such Canadian business
and the value of the assets of the Canadian business as shown on its financial statements is not less than a specified amount,
which for 1999 was $184 million. An investment in the shares of a Canadian business by a non-Canadian other than a “World
Trade Organization Investor” when the Company is not controlled by a World Trade Organization Investor, would be reviewable
under the Investment Act if it is an investment to acquire control of the Canadian business and the value of the assets of the
Canadian business as shown on its financial statements is $5 million or more, or if an order for review is made by the federal
cabinet on the grounds that the investment relates to Canada’s cultural heritage or national identity.
The
acquisition by a World Trade Organization Investor of control of a Canadian business in any of the following sectors is also subject
to review if the value of the assets of the Canadian business exceeds $5 million (as shown on its financial statements): uranium,
financial services (except insurance), transportation services and cultural businesses, which include broadcast media (publication,
distribution or sale of books, magazines, periodicals, newspapers, music, film and video products and the exhibition of film and
video products), television and radio services. As the Company’s business does not fall under any of the aforementioned
categories, the acquisition of control of the Company, in excess of the $5 million threshold, by a World Trade Organization Investor
would not be subject to such review.
A
non-Canadian would acquire control of the Company for purposes of the Investment Act if the non-Canadian acquired a majority of
the common shares.
The
acquisition of less than a majority but one-third or more of the common shares would be presumed to be an acquisition of control
of the Company unless it could be established that, on acquisition, the Company was not controlled in fact by the acquirer through
the ownership of common shares. Notwithstanding the review provisions, any transaction involving the acquisition of control of
a Canadian business or the establishment of a new business in Canada by a non-Canadian is a notifiable transaction and must be
reported to Industry Canada by the non-Canadian making the investment either before or within thirty days after the investment.
Certain
transactions relating to common shares are exempt from the Investment Act, including:
|
●
|
an
acquisition of common shares by a person in the ordinary course of that person’s business as a trader or dealer in securities;
|
|
|
|
|
●
|
an
acquisition of control of the Company in connection with the realization of security granted for a loan or other financial
assistance and not for a purpose related to the provisions of the Investment Act; and
|
|
|
|
|
●
|
an
acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization, following
which the ultimate direct or indirect control in fact of the Company, through the ownership of common shares, remained unchanged.
|
Canadian
Competition Act Review
Investments
giving rise to the acquisition or establishment, directly or indirectly, by one or more persons of control over, or a significant
interest in the whole or part of a business of a competitor, supplier, customer or other person are subject to substantive review
by Canada’s Competition Law Authority, the Director of Investigation and Research (the “Director”). If or when
the Director concludes that a merger, whether by purchase or lease of shares or assets, by amalgamation or by combination, or
otherwise, prevents or lessens, or is likely to prevent or lessen competition substantially, he may apply as may be necessary
to eliminate the substantial lessening or prevention of competition. Such substantive merger review power applies to all mergers,
whether or not they meet limits for pre-notification under the Competition Act.
In
addition to substantive merger review, the Competition Act provides for a pre-notification regime respecting mergers of a certain
size. The regime applies in respect of share acquisitions, asset acquisitions, amalgamations and combinations. For ease of reference,
this filing refers specifically to share acquisition, although the pre-notification regime applies, with the appropriate modification,
to other types of acquisition of control as well.
In
order for a share acquisition transaction to be pre-notifiable, the parties to the transaction (being the person or persons who
proposed to acquire shares, and the corporation the shares of which are to be acquired), together with their affiliates (being
all firms with a 50% or more voting shares linkage up and down the chain) must have:
(i)
|
aggregate
gross assets in Canada that exceed $400 million in value, as shown on their audited financial statements for the most recently
completed fiscal year (which must be within the last fifteen (15) months); or
|
|
|
(ii)
|
aggregate
gross revenue from sales in, from or into Canada that exceed $400 million for the most recently completed fiscal year shown
on the said financial statements; and
|
|
|
(iii)
|
the
party being acquired or corporations controlled by that party must have gross assets in Canada, or gross revenues from sales
in or from Canada, exceeding $35 million as shown on the said financial statements. Acquisition of shares carrying up to 20%
of the votes of a publicly-traded corporation, or 35% of the votes in a private corporation, will not be subject to pre-notification,
regardless of the above thresholds. However, exceeding the 20% or the 35% threshold, and again exceeding the 50% threshold,
gives rise to an obligation of notification if the size threshold is met.
|
If
a transaction is pre-notifiable, a filing must be made with the Director containing the prescribed information with respect to
the parties, and a waiting period (either seven or twenty-one days, depending on whether a long or short form filing is chosen)
must expire prior to closing.
As
an alternative to pre-notification, the Director may grant an Advance Ruling Certificate, which exempts the transaction from pre-notification.
Advance Ruling Certificates are granted where the Director concludes, based on the information provided to him, that he would
not have sufficient grounds on which to apply to the Competition Tribunal to challenge the Merger.
E.
Taxation
This
summary is of a general nature only and is not intended to be, and should not be interpreted as, legal or tax advice to any prospective
purchaser or holder of the Company’s shares and no representation with respect to the Canadian federal income tax consequences
to any such prospective purchaser is made. Accordingly, prospective purchasers of the Company’s shares should consult with
their own tax advisors with respect to their individual circumstances.
The
following summary describes the principal Canadian federal income tax considerations generally applicable to a holder of the Company’s
shares who, for purposes of the Income Tax Act (Canada) (the “Canadian Tax Act”) and the Canada-United States Income
Tax Convention, 1980 (the “Convention”) and at all relevant times is resident in the United States and not resident
in Canada, deals at arm’s length with the Company, holds the Company’s shares as capital property, and does not use
or hold and is not deemed to use or hold the Company’s shares in or in the course of carrying on business in Canada (a “United
States Holder”).
This
following summary is based upon the current provisions of the Canadian Income Tax Act, the regulations thereunder, all specific
proposals to amend the Canadian Tax Act and the regulations announced by the Minister of Finance (Canada) prior to the date hereof
and the Company’s understanding of the published administrative practices of the Canada Customs and Revenue Agency (formerly
Revenue Canada, Customs, Excise and Taxation). This summary does not take into account or anticipate any other changes in the
governing law, whether by judicial, governmental or legislative decision or action, nor does it take into account the tax legislation
or considerations of any province, territory or non-Canadian jurisdiction (including the United States), which legislation or
considerations may differ significantly from those described herein.
Disposition
of the Company’s Shares
In
general, a United States shareholder will not be subject to Canadian income tax on capital gains arising on the disposition of
the Company’s shares, unless such shares are “taxable Canadian property” within the meaning of the Canadian
Income Tax Act and no relief is afforded under any applicable tax treaty. The shares of the Company would be taxable Canadian
property of a non-resident if at any time during the five-year period immediately preceding a disposition by the non-resident
of such shares, not less than 25% of the issued shares of any class or series of all classes of shares of the Company belonged
to the non-resident, to persons with whom the non-resident did not deal at arm’s length, or to the non-resident and persons
with whom the non-resident did not deal at arm’s length for purposes of the Canadian Income Tax Act. For this purpose, issued
shares include options to acquire such shares (including conversion rights) held by such persons. Under the Convention, a capital
gain realized by a resident of the United States will not be subject to Canadian tax unless the value of the shares of the Company
is derived principally from real estate (as defined in the Convention) situated in Canada.
F.
Dividends and Paying Agents
Not
required
G.
Statement by Experts
Not
required
H.
Documents on display
All
documents referenced in this Form 20-F may be viewed at the offices of the Company during business hours 1055 West Hastings, Vancouver
BC V6E 2E9, Canada, Telephone 604-770-4334.
I.
Subsidiary Information
In
June 2015 the Company incorporated North American Nickel (US) Inc. to hold a mineral lease in Michigan, which was granted in January
2016.
ITEM
11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
required
ITEM
12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not
required
Consolidated
Statements of Financial Position
(Expressed
in thousands of Canadian dollars)
|
|
|
Notes
|
|
|
December
31, 2018
|
|
|
December
31, 2017
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
339
|
|
|
|
398
|
|
Short-term investments
|
|
4
|
|
|
|
2,500
|
|
|
|
2,500
|
|
Receivables and
other current assets
|
|
5
|
|
|
|
133
|
|
|
|
242
|
|
TOTAL
CURRENT ASSETS
|
|
|
|
|
|
2,972
|
|
|
|
3,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
6
|
|
|
|
35
|
|
|
|
49
|
|
Exploration and evaluation assets
|
|
7
|
|
|
|
64,479
|
|
|
|
50,494
|
|
Reclamation of deposit
|
|
7
|
|
|
|
14
|
|
|
|
14
|
|
TOTAL
NON-CURRENT ASSETS
|
|
|
|
|
|
64,528
|
|
|
|
50,557
|
|
TOTAL
ASSETS
|
|
|
|
|
|
67,500
|
|
|
|
53,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
and accrued liabilities
|
|
8, 11
|
|
|
|
556
|
|
|
|
969
|
|
TOTAL
CURRENT LIABILITIES
|
|
|
|
|
|
556
|
|
|
|
969
|
|
TOTAL
LIABILITIES
|
|
|
|
|
|
556
|
|
|
|
969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Share capital – preferred
|
|
10
|
|
|
|
591
|
|
|
|
591
|
|
Share capital – common
|
|
10
|
|
|
|
87,947
|
|
|
|
73,598
|
|
Reserve
|
|
10
|
|
|
|
7,749
|
|
|
|
5,089
|
|
Deficit
|
|
|
|
|
|
(29,343
|
)
|
|
|
(26,550
|
)
|
TOTAL
EQUITY
|
|
|
|
|
|
66,944
|
|
|
|
52,728
|
|
TOTAL
LIABILITIES AND EQUITY
|
|
|
|
|
|
67,500
|
|
|
|
53,697
|
|
Nature
of Operations (Note 1)
The
accompanying notes are an integral part of these Consolidated Financial Statements.
Approved
by the Board of Directors on April 26, 2019
“signed”
|
|
“signed”
|
|
|
|
/s/
Keith Morrison
|
|
/s/
Doug Ford
|
Director
|
|
Audit
Committee Chair
|
|
|
34
| North American Nickel / YEAR END 2018
|
Consolidated
Statements of Comprehensive Loss
(Expressed
in thousands of Canadian dollars, except loss per share)
|
|
|
|
|
|
Year
Ended
December 31,
|
|
|
Year
Ended December 31,
|
|
|
Year
Ended
December 31,
|
|
|
|
Notes
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
expenses
|
|
11, 18
|
|
|
|
(2,340
|
)
|
|
|
(2,375
|
)
|
|
|
(2,021
|
)
|
Property investigation
|
|
|
|
|
|
(216
|
)
|
|
|
-
|
|
|
|
(15
|
)
|
Amortization
|
|
6
|
|
|
|
(14
|
)
|
|
|
(25
|
)
|
|
|
(42
|
)
|
Share-based
payments
|
|
10
|
|
|
|
(317
|
)
|
|
|
(504
|
)
|
|
|
(309
|
)
|
|
|
|
|
|
|
(2,887
|
)
|
|
|
(2,904
|
)
|
|
|
(2,387
|
)
|
OTHER ITEMS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
|
|
74
|
|
|
|
32
|
|
|
|
28
|
|
Finance fee
|
|
9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(95
|
)
|
Interest on capital contribution loan
|
|
9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(265
|
)
|
Foreign exchange
loss
|
|
|
|
|
|
(209
|
)
|
|
|
(7
|
)
|
|
|
(158
|
)
|
|
|
|
|
|
|
(135
|
)
|
|
|
25
|
|
|
|
(490
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
COMPREHENSIVE LOSS FOR THE YEAR
|
|
|
|
|
|
(3,022
|
)
|
|
|
(2,879
|
)
|
|
|
(2,877
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted weighted average number of common shares outstanding
|
|
|
|
|
|
718,248,135
|
|
|
|
465,929,638
|
|
|
|
269,778,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share
|
|
|
|
|
|
(0.00
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
The
accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
35
| North American Nickel / YEAR END 2018
|
Consolidated
Statements of Changes in Equity
(Expressed
in thousands of Canadian dollars, unless otherwise indicated)
|
|
|
Notes
|
|
|
Number
Shares
|
|
|
Share
Capital
|
|
|
Preferred
Stock
|
|
|
Reserve
|
|
|
Deficit
|
|
|
Total
Equity
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
BALANCE
AT DECEMBER 31, 2015
|
|
|
|
|
|
207,629,506
|
|
|
|
50,574
|
|
|
|
591
|
|
|
|
5,135
|
|
|
|
(23,820
|
)
|
|
|
32,480
|
|
Net and comprehensive
loss
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,877
|
)
|
|
|
(2,877
|
)
|
Share capital issued
through private placement
|
|
10
|
|
|
|
160,000,000
|
|
|
|
12,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,000
|
|
Shares issued for
fee on loan
|
|
9
|
|
|
|
952,380
|
|
|
|
95
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
95
|
|
Share-based payments
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
309
|
|
|
|
-
|
|
|
|
309
|
|
Forfeited/expired
options
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(912
|
)
|
|
|
912
|
|
|
|
-
|
|
Expired warrants
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,813
|
)
|
|
|
1,813
|
|
|
|
-
|
|
Capital contribution
interest on loan
|
|
9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
265
|
|
|
|
-
|
|
|
|
265
|
|
Capital contribution
reallocation on loan settlement
|
|
9
|
|
|
|
-
|
|
|
|
265
|
|
|
|
-
|
|
|
|
(265
|
)
|
|
|
-
|
|
|
|
-
|
|
Share issue costs
|
|
10
|
|
|
|
-
|
|
|
|
(619
|
)
|
|
|
-
|
|
|
|
48
|
|
|
|
-
|
|
|
|
(571
|
)
|
BALANCE AT DECEMBER
31, 2016
|
|
|
|
|
|
368,581,886
|
|
|
|
62,315
|
|
|
|
591
|
|
|
|
2,767
|
|
|
|
(23,972
|
)
|
|
|
41,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net and comprehensive
loss
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,879
|
)
|
|
|
(2,879
|
)
|
Share capital issued
through private prospectus
|
|
10
|
|
|
|
145,030,833
|
|
|
|
10,877
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,877
|
|
Share capital issued
through private placement
|
|
10
|
|
|
|
40,982,448
|
|
|
|
3,074
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,074
|
|
Value allocated to
warrants issued
|
|
10
|
|
|
|
-
|
|
|
|
(2,080
|
)
|
|
|
|
|
|
|
2,080
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/expired
options
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(283
|
)
|
|
|
283
|
|
|
|
-
|
|
Expired warrants
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(18
|
)
|
|
|
18
|
|
|
|
-
|
|
Share-based payments
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
504
|
|
|
|
-
|
|
|
|
504
|
|
Share issue costs
|
|
10
|
|
|
|
-
|
|
|
|
(588
|
)
|
|
|
-
|
|
|
|
39
|
|
|
|
-
|
|
|
|
(549
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT DECEMBER
31, 2017
|
|
|
|
|
|
554,595,167
|
|
|
|
73,598
|
|
|
|
591
|
|
|
|
5,089
|
|
|
|
(26,550
|
)
|
|
|
52,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net and comprehensive
loss
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,022
|
)
|
|
|
(3,022
|
)
|
Share capital issued
through private placement
|
|
10
|
|
|
|
233,333,333
|
|
|
|
17,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,500
|
|
Value allocated to
warrants issued
|
|
10
|
|
|
|
-
|
|
|
|
(2,572
|
)
|
|
|
-
|
|
|
|
2,572
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/expired
stock options
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(181
|
)
|
|
|
181
|
|
|
|
-
|
|
Expired warrants
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(48
|
)
|
|
|
48
|
|
|
|
-
|
|
Share-based payments
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
317
|
|
|
|
-
|
|
|
|
317
|
|
Share issue costs
|
|
10
|
|
|
|
-
|
|
|
|
(579
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(579
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
AT DECEMBER 31, 2018
|
|
|
|
|
|
787,928,500
|
|
|
|
87,947
|
|
|
|
591
|
|
|
|
7,749
|
|
|
|
(29,343
|
)
|
|
|
66,944
|
|
The
accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
36
| North American Nickel / YEAR END 2018
|
Consolidated
Statements of Cash Flows
(Expressed
in thousands of Canadian dollars)
|
|
|
Year
Ended
|
|
|
Year
Ended
|
|
|
Year
Ended
|
|
|
|
Notes
|
|
|
December
31, 2018
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
|
|
|
|
(3,022
|
)
|
|
|
(2,879
|
)
|
|
|
(2,877
|
)
|
Items not affecting cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
14
|
|
|
|
25
|
|
|
|
42
|
|
Share-based payments
|
|
|
|
|
|
317
|
|
|
|
504
|
|
|
|
309
|
|
Interest income
|
|
|
|
|
|
(74
|
)
|
|
|
(16
|
)
|
|
|
(28
|
)
|
Changes in working capital
|
|
12
|
|
|
|
21
|
|
|
|
(95
|
)
|
|
|
(52
|
)
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest received
|
|
|
|
|
|
80
|
|
|
|
32
|
|
|
|
30
|
|
Finance fee
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
95
|
|
Interest
expense on loan
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
265
|
|
Net
cash used in operating activities
|
|
|
|
|
|
(2,664
|
)
|
|
|
(2,429
|
)
|
|
|
(2,216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures on exploration and evaluation
assets
|
|
|
|
|
|
(14,566
|
)
|
|
|
(11,385
|
)
|
|
|
(8,604
|
)
|
Prior year payables for exploration
and evaluation assets
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(87
|
)
|
Reclamation deposit
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(14
|
)
|
Short-term investments
|
|
|
|
|
|
-
|
|
|
|
200
|
|
|
|
(400
|
)
|
Purchase of equipment
|
|
|
|
|
|
-
|
|
|
|
(20
|
)
|
|
|
(3
|
)
|
Net
cash used in investing activities
|
|
|
|
|
|
(14,566
|
)
|
|
|
(11,205
|
)
|
|
|
(9,108
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common
shares
|
|
10
|
|
|
|
17,500
|
|
|
|
13,951
|
|
|
|
12,000
|
|
Direct financing
costs
|
|
|
|
|
|
(329
|
)
|
|
|
(549
|
)
|
|
|
(571
|
)
|
Net
cash provided by financing activities
|
|
|
|
|
|
17,171
|
|
|
|
13,402
|
|
|
|
11,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash equivalents for the year
|
|
|
|
|
|
(59
|
)
|
|
|
(232
|
)
|
|
|
105
|
|
Cash and cash
equivalents, beginning of the year
|
|
|
|
|
|
398
|
|
|
|
630
|
|
|
|
525
|
|
Cash
and cash equivalents, at the end of the year
|
|
|
|
|
|
339
|
|
|
|
398
|
|
|
|
630
|
|
The
accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
37
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
1.
NATURE AND CONTINUANCE OF OPERATIONS
North
American Nickel Inc. (the “Company”) was incorporated on September 23, 1983, under the laws of the Province of British
Columbia, Canada. The head office and principal address is located at 3400 – 100 King Street West, PO Box 130, Toronto,
Ontario, M5X 1A4 and the records office of the Company is located at Suite 2200, 1055 West Hastings Street, Vancouver,
British Columbia, Canada, V7P 3P1. The Company’s common shares trade on the TSX Venture Exchange (“TSXV”) under
the symbol “NAN”.
The
Company’s principal business activity is the exploration and development of mineral properties in Greenland, Canada and
United States. The Company has not yet determined whether any of these properties contain ore reserves that are economically recoverable.
The recoverability of carrying amounts shown for exploration and evaluation assets is dependent upon a number of factors including
environmental risk, legal and political risk, the existence of economically recoverable mineral reserves, confirmation of the
Company’s interests in the underlying mineral claims, the ability of the Company to obtain necessary financing to complete
exploration and development, and to attain sufficient net cash flow from future profitable production or disposition proceeds.
These
consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning
it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary
course of operations. The ability of the Company to continue operations as a going concern is ultimately dependent upon achieving
profitable operations. To date, the Company has not generated profitable operations from its resource activities and will need
to invest additional funds in carrying out its planned exploration, development and operational activities. These uncertainties
cast substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements
do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.
The
exploration and evaluation properties in which the Company currently has an interest are in the exploration stage. As such, the
Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and cover administrative
costs, the Company will use its existing working capital and raise additional amounts as needed. Although the Company has been
successful in its past fundraising activities, there is no assurance as to the success of future fundraising efforts or as to
the sufficiency of funds raised in the future. The Company will continue to assess new properties and seek to acquire interests
in additional properties if there is sufficient geologic or economic potential and if adequate financial resources are available
to do so.
The
consolidated financial statements were approved and authorized for issuance by the Board of Directors of the Company on April
26, 2019.
2.
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
(a)
Statement of Compliance
The
Company’s consolidated financial statements were prepared in accordance with International Financial Reporting Standards
(“IFRS”).
(b)
Basis of Preparation
These
consolidated financial statements have been prepared under the historical cost convention, modified by the revaluation of any
financial assets and financial liabilities where applicable. The preparation of financial statements in conformity with IFRS requires
the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying
the Company’s accounting policies. These areas involving a higher degree of judgment or complexity, or areas where assumptions
and estimates are significant to the consolidated financial statements, are disclosed in Note 3.
|
|
38
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
(c)
Basis of consolidation
These
consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary, North American
Nickel (US) Inc. which was incorporated in the State of Delaware on May 22, 2015. Consolidation is required when the Company is
exposed, or has rights to variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee. All intercompany transactions, balances, income and expenses are eliminated upon consolidation.
(d)
Foreign currency translation
Foreign
currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost
continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported
at the exchange rate at the date when fair values were determined.
Exchange
differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in
the statement of comprehensive loss in the period in which they arise, except where deferred in equity as a qualifying cash flow
or net investment hedge.
Exchange
differences arising on the translation of non-monetary items are recognized in other comprehensive income in the statement of
comprehensive loss to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive
income. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit
or loss.
(e)
Exploration and evaluation assets
Exploration
and evaluation assets include the costs of acquiring licenses, costs associated with exploration and evaluation activity, and
the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination. Exploration and
evaluation expenditures are initially capitalized. Costs incurred before the Company has obtained the legal rights to explore
an area are recognized in profit or loss.
Government
tax credits received are generally recorded as a reduction to the cumulative costs incurred and capitalized on the related property.
Exploration
and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial
viability, and (ii) facts, events and circumstances suggest that the carrying amount exceeds the recoverable amount.
Once
the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable,
exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified
to mining property and development assets within equipment.
Recoverability
of the carrying amount of any exploration and evaluation assets is dependent on successful development and commercial exploitation,
or alternatively, sale of the respective areas of interest.
The
Company may occasionally enter into farm-out arrangements, whereby it will transfer part of an interest, as consideration, for
an agreement by the farmee to meet certain exploration and evaluation expenditures which would have otherwise been undertaken
by the Company. The Company does not record any expenditures made by the farmee on its behalf. Any cash consideration received
from the agreement is credited against the costs previously capitalized to the mineral interest given up by the Company, with
any excess consideration accounted for in profit.
When
a project is deemed to no longer have commercially viable prospects to the Company, exploration and evaluation expenditures in
respect of that project are deemed to be impaired. As a result, those exploration and evaluation expenditure costs, in excess
of estimated recoveries, are written off to the statement of comprehensive loss/income.
|
|
39
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
(f)
Restoration and environmental obligations
The
Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of
long-term assets, when those obligations result from the acquisition, construction, development or normal operation of the assets.
The net present value of future restoration cost estimates arising from the decommissioning of plant and other site preparation
work is capitalized to exploration and evaluation assets along with a corresponding increase in the restoration provision in the
period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present
value. The restoration asset will be depreciated on the same basis as other mining assets.
The
Company’s estimates of restoration costs could change as a result of changes in regulatory requirements, discount rates
and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to exploration
and evaluation assets with a corresponding entry to the restoration provision. The Company’s estimates are reviewed annually
for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates.
Changes
in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to profit and loss
for the period.
The
costs of restoration projects included in the provision are recorded against the provision as incurred. The costs to prevent and
control environmental impacts at specific properties are capitalized in accordance with the Company’s accounting policy
for exploration and evaluation assets.
(g)
Impairment of assets
Impairment
tests on intangible assets with indefinite useful economic lives are undertaken annually at the financial year-end. Other non-financial
assets, including exploration and evaluation assets, are subject to impairment tests whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount,
which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly.
Where
it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s
cash-generating unit, which is the lowest group of assets in which the asset belongs and for which there are separately identifiable
cash inflows that are largely independent of the cash inflows from other assets.
An
impairment loss is charged to the profit or loss, except to the extent the loss reverses gains previously recognized in other
comprehensive loss/income.
(h)
Financial instruments
The
Company adopted all of the requirements of IFRS 9
Financial Instruments
(“IFRS 9”) on a retroactive basis in
accordance with the transitional provisions. IFRS 9 replaces IAS 39
Financial Instruments: Recognition and Measurement
(“IAS
39”). The standard promulgates a revised model for recognition and measurement of financial instruments and a single, forward-looking
“expected loss” impairment model. The adoption of IFRS 9 did not result in any change in the carrying values of any
of the Company’s financial assets on the transition date; therefore, comparative figures have not been restated.
|
|
40
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
The
following is the Company’s new accounting policy for financial instruments under IFRS 9:
Classification
The
Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”),
at fair value through other comprehensive income (loss) (“FVTOCI”), or at amortized cost. The Company determines the
classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s
business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are
held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable
election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized
cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Company has
opted to measure them at FVTPL.
The
Company completed a detailed assessment of its financial assets and liabilities as at January 1, 2018. The following table shows
the original classification under IAS 39 and the new classification under IFRS 9:
Financial
asset/liability
|
|
Original
classification IAS 39
|
|
New
classification IFRS 9
|
Cash
and cash equivalents
|
|
FVTPL
|
|
FVTPL
|
Other
receivable
|
|
Amortized
cost
|
|
Amortized
cost
|
Trade
payables
|
|
Amortized
cost
|
|
Amortized
cost
|
Measurement
Financial
assets and liabilities at amortized cost
Financial
assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively,
and subsequently carried at amortized cost less any impairment.
Financial
assets and liabilities at FVTPL
Financial
assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss.
Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at
FVTPL are included in the consolidated statements of comprehensive loss in the period in which they arise.
Impairment
of financial assets at amortized cost
An
‘expected credit loss’ impairment model applies which requires a loss allowance to be recognized based on expected
credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss
is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced
to estimated present value of the future cash flows associated with the asset, discounted at the financial asset’s original
effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in profit
or loss for the period.
In
a subsequent period, if the amount of the impairment loss related to financial assets measured at amortized cost decreases, the
previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment
at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.
Derecognition
Financial
assets
The
Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when
it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains
and losses on derecognition are generally recognized in the statements of comprehensive loss.
(i)
Loss per share
The
Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this
method, the dilutive effect on loss per common share is recognized on the use of the proceeds that could be obtained upon exercise
of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average
market price during the period.
|
|
41
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
Basic
loss per common share is calculated using the weighted average number of common shares outstanding during the period and does
not include outstanding options and warrants. Dilutive loss per common share is not presented differently from basic loss per
share as the conversion of outstanding stock options and warrants into common shares would be anti-dilutive.
(j)
Income taxes
Income
tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in net income except to the extent
that it arises in a business combination, or from items recognized directly in equity or other comprehensive loss/income.
Current
income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted,
at the reporting date, in the countries where the Company operates and generates taxable income.
Current
income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive
income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect
to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred
income tax is provided using the asset and liability method of temporary differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for financial reporting purposes.
The
carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent
that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to
be utilized.
Deferred
income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized
or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the
reporting period.
Deferred
income tax assets and deferred income tax liabilities are offset, only if a legally enforceable right exists to set off current
tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same
taxation authority.
(k)
Share-based payments
Where
equity-settled share options are awarded to employees, the fair value of the options at the date of grant is recognized over the
vesting period. Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to
vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number
of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the
options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these non-vesting
and market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition
or where a non-vesting condition is not satisfied.
Where
the terms and conditions of options are modified, the increase in the fair value of the options, measured immediately before and
after the modification, is also recognized over the remaining vesting period.
Where
equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received. Amounts
related to the issuance of shares are recorded as a reduction of share capital.
|
|
42
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
When
the value of goods and services received in exchange for the share-based payment cannot be reliably estimated, the fair value
is measured by use of a valuation model. The expected life used in the model is adjusted, based on management’s best estimate,
for the effects of non-transferability, exercise restrictions, and behavioural considerations.
All
equity-settled share-based payments are reflected in share-based payments reserve, until exercised. Upon exercise shares are issued
from treasury and the amount reflected in share-based payments reserve is credited to share capital along with any consideration
paid.
(l)
Share capital
The
Company’s common shares, preferred shares and share warrants shares are classified as equity instruments.
Incremental
costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.
Proceeds
received on the issuance of units, consisting of common shares and warrants are allocated to share capital.
(m)
Equipment
Equipment
is stated at historical cost less accumulated depreciation and accumulated impairment losses.
Subsequent
costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
The carrying amount of a significant replaced part is derecognized. All other repairs and maintenance are charged to the statement
of income and comprehensive income during the financial period in which they are incurred. Gains and losses on disposals are determined
by comparing the proceeds with the carrying amount and are recognized in profit or loss.
Depreciation
and amortization are calculated on a straight-line method to charge the cost, less residual value, of the assets to their residual
values over their estimated useful lives. The depreciation and amortization rate applicable to each category of equipment is as
follows:
Equipment
|
|
Depreciation
rate
|
|
|
|
|
|
Exploration equipment
|
|
|
20
|
%
|
|
|
|
|
|
Computer software
|
|
|
50
|
%
|
|
|
|
|
|
Computer equipment
|
|
|
55
|
%
|
Standards,
Interpretations and Amendments Not Yet Effective:
IFRS
16 - “Leases”
IFRS
16 replaces current guidance in IAS 17. Under IAS 17, lessees were required to make a distinction between a finance lease (on
the balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognize a lease liability reflecting
future lease payments and a “right-of-use asset” for virtually all lease contracts. The IASB has included an optional
exemption for certain short-term leases and leases of low value assets, however this exemption can only be applied by lessees.
The standard applies to annual periods beginning on or after January 1, 2019, with earlier application permitted. The adoption
of this standard will not result in any impact to the Company’s financial statements.
|
|
43
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
IFRIC
23 – “Uncertainty over Income Tax Treatments”
In
June 2017, the IFRS Interpretations Committee of the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (IFRIC 23).
The interpretation provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in
which there is uncertainty over income tax treatments. The Interpretation is applicable for annual periods beginning on or after
January 1, 2019. Earlier application is permitted. The Interpretation requires: (a) an entity to contemplate whether uncertain
tax treatments should be considered separately, or together as a group, based on which approach provides better predictions of
the resolution; (b) an entity to determine if it is probable that the tax authorities will accept the uncertain tax treatment;
and (c) if it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainty based on the most
likely amount or expected value, depending on whichever method better predicts the resolution of the uncertainty.
The
adoption of these standards and interpretations is not expected to have a material effect on the Company’s future results
and financial position.
Amendments
to References to the Conceptual Framework in IFRS Standards
On
March 29, 2018 the International Accounting Standards Board (“IASB”) issued a revised version of its Conceptual Framework
for Financial Reporting (the Framework), that underpins IFRS Standards. The IASB also issued Amendments to References to the Conceptual
Framework in IFRS Standards (the Amendments) to update references in IFRS Standards to previous versions of the Conceptual Framework.
Both documents are effective from January 1, 2020 with earlier application permitted.
Some
Standards include references to the 1989 and 2010 versions of the Framework. The IASB has published a separate document which
contains consequential amendments to affected Standards so that they refer to the new Framework, with the exception of IFRS 3
Business Combinations which continues to refer to both the 1989 and 2010 Frameworks. The Company does not intend to adopt the
Amendments in its financial statements before the annual period beginning on January 1, 2020. The extent of the impact of the
change has not yet been determined.
IAS
1 - Presentation of Financial Statements and IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
In
October 2018, the IASB issued amendments to International Accounting Standard (“IAS”) 1, Presentation of Financial
Statements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The amendments are to clarify the definition
of ‘material’ and to align the definition used in the Conceptual Framework and the standards themselves. The amendments
are effective January 1, 2020. The Company is evaluating the impact of the adoption of these amendments.
3.
CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The
preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions
that can affect reported amounts of assets, liabilities revenues and expenses and the accompanying disclosures. Estimates and
assumptions are continuously evaluated and are based on management’s historical experience and on other assumptions believed
to be reasonable under the circumstances. However, different judgments, estimates and assumptions could result in outcomes that
require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements are:
(a)
Recoverability of Exploration and Evaluation Assets
The
ultimate recoverability of the exploration and evaluation assets of $64,479 carrying value at December 31, 2018, is dependent
upon the Company’s ability to obtain the necessary financing and permits to complete the development and commence profitable
production at the Manniitsoq Project, or alternatively, upon the Company’s ability to dispose of its interest therein on
an advantageous basis. A review of the indicators of potential impairment is carried out at least at each period end.
|
|
44
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
Management
undertakes a periodic review of these assets to determine whether any indication of impairment exists. Where an indicator of impairment
exists, a formal estimate of the recoverable amount of the assets is made. An impairment loss is recognized when the carrying
value of the assets is higher than the recoverable amount and when mineral license tenements are relinquished or have lapsed.
In undertaking this review, management of the Company is required to make significant estimates of, among other things, discount
rates, commodity prices, availability of financing, future operating and capital costs and all aspects of project advancement.
These estimates are subject to various risks and uncertainties, which may ultimately have an effect on the expected recoverability
of the carrying values of the assets.
(b)
Restoration Provisions
Management’s
best estimates regarding the restoration provisions are based on the current economic environment. Changes in estimates of contamination,
restoration standards and restoration activities result in changes to provisions from period to period. Actual restoration provisions
will ultimately depend on future market prices for future restoration obligations. Management has determined that the Company
does not have any significant restoration obligations as at December 31, 2018.
(c)
Valuation of Share-Based Compensation
The
Company estimates the fair value of convertible securities such as warrants and options using the Black-Scholes Option Pricing
Model which requires significant estimation around assumptions and inputs such as expected term to maturity, expected volatility
and expected forfeiture rates. The accounting policies in Note 2(k) and Note 10 of the financial statements contain further details
of significant assumptions applied to these areas of estimation.
(d)
Going Concern
Financial
statements are prepared on a going concern basis unless management either intends to liquidate the Company or to cease trading,
or has no realistic alternative to do so. Assessment of the Company’s ability to continue as a going concern requires the
consideration of all available information about the future, which is at least, but not limited to, twelve months from the end
of the reporting period. This information includes estimates of future cash flows and other factors, the outcome of which is uncertain.
When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast substantial
doubt upon the Company’s ability to continue as a going concern those uncertainties are disclosed.
4.
SHORT-TERM INVESTMENTS
Short-term
investments are comprised of a highly liquid Canadian dollar denominated guaranteed investment certificate with an initial term
to maturity greater than ninety days, but not more than one year, that is readily convertible to a contracted amount of cash.
The counter-party is a Canadian financial institution. During the year ended December 31, 2018, the instrument was yielding an
annual interest rate range of 1.55% (December 31, 2017 - 1.10%).
5.
RECEIVABLES AND OTHER CURRENT ASSETS
A
summary of the receivables and other current assets as of December 31, 2018 is detailed in the table below:
|
|
December
31,
2018
|
|
|
December
31,
2017
|
|
Sales taxes receivable
|
|
|
75
|
|
|
|
143
|
|
Interest receivable
|
|
|
10
|
|
|
|
16
|
|
Other current
assets
|
|
|
48
|
|
|
|
83
|
|
|
|
|
133
|
|
|
|
242
|
|
Other
current assets is comprised of prepaid expenses.
|
|
45
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
6.
PROPERTY, PLANT AND EQUIPMENT
The
table below sets out costs and accumulated depreciation as at December 31, 2018 and 2017:
|
|
Exploration
Equipment
|
|
|
Computer
Equipment
|
|
|
Computer
Software
|
|
|
Total
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – December
31, 2016
|
|
|
47
|
|
|
|
10
|
|
|
|
136
|
|
|
|
193
|
|
Additions
|
|
|
20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
Balance –
December 31, 2017 and 2018
|
|
|
67
|
|
|
|
10
|
|
|
|
136
|
|
|
|
213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – December 31, 2016
|
|
|
32
|
|
|
|
7
|
|
|
|
100
|
|
|
|
139
|
|
Depreciation
|
|
|
6
|
|
|
|
1
|
|
|
|
18
|
|
|
|
25
|
|
Balance – December 31, 2017
|
|
|
38
|
|
|
|
8
|
|
|
|
118
|
|
|
|
164
|
|
Depreciation
|
|
|
5
|
|
|
|
1
|
|
|
|
8
|
|
|
|
14
|
|
Balance –
December 31, 2018
|
|
|
43
|
|
|
|
9
|
|
|
|
126
|
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2016
|
|
|
15
|
|
|
|
3
|
|
|
|
36
|
|
|
|
54
|
|
As at December 31, 2017
|
|
|
29
|
|
|
|
2
|
|
|
|
18
|
|
|
|
49
|
|
As at December
31, 2018
|
|
|
24
|
|
|
|
1
|
|
|
|
10
|
|
|
|
35
|
|
|
|
46
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
7.
EXPLORATION AND EVALUATION ASSETS
|
|
Canada
|
|
|
US
|
|
|
Greenland
|
|
|
|
|
|
|
Post
Creek Property
|
|
|
Halcyon
Property
|
|
|
Quetico
Claims
|
|
|
Section
35 Property
|
|
|
Maniitsoq
Property
|
|
|
Total
|
|
Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,December31, 2017
|
|
|
278
|
|
|
|
214
|
|
|
|
-
|
|
|
|
6
|
|
|
|
36
|
|
|
|
534
|
|
Acquisition
costs – cash
|
|
|
10
|
|
|
|
8
|
|
|
|
42
|
|
|
|
2
|
|
|
|
6
|
|
|
|
68
|
|
Balance, December
31, 2018
|
|
|
288
|
|
|
|
222
|
|
|
|
42
|
|
|
|
8
|
|
|
|
42
|
|
|
|
602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2017
|
|
|
1,138
|
|
|
|
187
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48,635
|
|
|
|
49,960
|
|
Administration
|
|
|
2
|
|
|
|
2
|
|
|
|
1
|
|
|
|
-
|
|
|
|
486
|
|
|
|
491
|
|
Camp operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,943
|
|
|
|
2,943
|
|
Corporate social
responsibility
|
|
|
1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
58
|
|
|
|
60
|
|
Drilling expenses
|
|
|
219
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,270
|
|
|
|
4,489
|
|
Environment,
health and safety
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
135
|
|
|
|
135
|
|
Geology
|
|
|
40
|
|
|
|
17
|
|
|
|
20
|
|
|
|
-
|
|
|
|
662
|
|
|
|
739
|
|
Geophysics
|
|
|
29
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
824
|
|
|
|
854
|
|
Infrastructure
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31
|
|
|
|
31
|
|
Helicopter charter
aircraft
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,138
|
|
|
|
4,138
|
|
Property maintenance
|
|
|
2
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18
|
|
|
|
22
|
|
Technical
studies
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15
|
|
|
|
15
|
|
|
|
|
293
|
|
|
|
22
|
|
|
|
22
|
|
|
|
-
|
|
|
|
13,580
|
|
|
|
13,917
|
|
Balance, December
31, 2018
|
|
|
1,431
|
|
|
|
209
|
|
|
|
22
|
|
|
|
-
|
|
|
|
62,215
|
|
|
|
63,877
|
|
Total,
December 31, 2018
|
|
|
1,719
|
|
|
|
431
|
|
|
|
64
|
|
|
|
8
|
|
|
|
62,257
|
|
|
|
64,479
|
|
|
|
Canada
|
|
|
US
|
|
|
Greenland
|
|
|
|
|
|
|
Post
Creek
Property
|
|
|
Halcyon
Property
|
|
|
Section
35 Property
|
|
|
Maniitsoq
Property
|
|
|
Total
|
|
Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31,
2016
|
|
|
268
|
|
|
|
206
|
|
|
|
3
|
|
|
|
20
|
|
|
|
497
|
|
Acquisition
costs – cash
|
|
|
10
|
|
|
|
8
|
|
|
|
3
|
|
|
|
16
|
|
|
|
37
|
|
Balance, December
31, 2017
|
|
|
278
|
|
|
|
214
|
|
|
|
6
|
|
|
|
36
|
|
|
|
534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2016
|
|
|
1,085
|
|
|
|
173
|
|
|
|
-
|
|
|
|
36,587
|
|
|
|
37,845
|
|
Administration
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
516
|
|
|
|
518
|
|
Corporate social
responsibility
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37
|
|
|
|
37
|
|
Drilling expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,337
|
|
|
|
3,337
|
|
Environment,
health and safety
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
99
|
|
|
|
99
|
|
Camp operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,004
|
|
|
|
3,004
|
|
Helicopter charter
aircraft
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,058
|
|
|
|
3,058
|
|
Geology
|
|
|
48
|
|
|
|
14
|
|
|
|
-
|
|
|
|
691
|
|
|
|
753
|
|
Geophysics
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,014
|
|
|
|
1,016
|
|
Infrastructure
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
255
|
|
|
|
255
|
|
Property maintenance
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7
|
|
|
|
7
|
|
Technical
studies
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30
|
|
|
|
31
|
|
|
|
|
53
|
|
|
|
14
|
|
|
|
-
|
|
|
|
12,048
|
|
|
|
12,115
|
|
Balance, December
31,2017
|
|
|
1,138
|
|
|
|
187
|
|
|
|
-
|
|
|
|
48,635
|
|
|
|
49,960
|
|
Total,
December 31, 2017
|
|
|
1,416
|
|
|
|
401
|
|
|
|
6
|
|
|
|
48,671
|
|
|
|
50,494
|
|
|
|
47
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
The following is a description of the Company’s
exploration and evaluation assets and the related spending commitments:
Post Creek
On December 23, 2009, the Company executed
a letter of intent whereby the Company has an option to acquire a mineral claim known as the Post Creek Property located within
the Sudbury Mining District of Ontario.
On April 5, 2010 and as amended on March 12,
2013, the Company entered into an option agreement to acquire a 100% interest in the Post Creek Property, subject to certain net
smelter return royalties (“NSR”) and advance royalty payments. To December 31, 2015, the Company has completed the
required consideration and acquired its interest in the Post Creek Property. Commencing August 1, 2015, the Company is obligated
to pay advances on the NSR of $10 per annum, totalling $10 during the year ended December 31, 2018 (December 31, 2017 - $10), the
total of which will be deducted from any payments to be made under the NSR.
During the year ended December 31, 2018, the
Company incurred exploration expenditures totalling $293 (December 31, 2017 - $53) on the Post Creek Property.
Halcyon
On April 5, 2010 and as amended on March 12,
2013, the Company entered into an option agreement to acquire rights to Halcyon Property, subject to certain NSR and advance royalty
payments. To December 31, 2015, the Company has completed the required consideration and acquired its interest in the Halcyon Property.
Commencing August 1, 2015, the Company is obligated to pay advances on the NSR of $8 per annum, totalling $8 during the year ended
December 31, 2018, (December 31, 2017 - $8), the total of which will be deducted from any payments to be made under the NSR arrangement.
During the year ended December 31, 2018, the
Company incurred $22 (December 31, 2017 - $14) in exploration and license related expenditures on the Halcyon Property.
Quetico
On
April 26, 2018
, the Company acquired certain claims known as
Quetico located within the Sudbury Mining District of Ontario. During the year ended December 2018, the Company incurred
total acquisition and exploration related costs of $64 (December 31, 2017 - $nil).
The
Company had no minimum required exploration commitment for the year ended December 31, 2018 as it is not required to file any
geoscience assessment work between the initial recording of a mining claim and the first anniversary date of the mining claim.
By
the second anniversary of the recording of a claim and by each anniversary thereafter, a minimum of $400 worth of exploration
activity per claim unit must be reported to the Provincial Recording Office. The company could maintain mining claims by filing
an Application to Distribute Banked Assessment Work Credits form before any due date. Payments in place of reporting assessment
work may also be used to meet yearly assessment work requirements, provided the payments are not used for the first unit of assessment
work and consecutively thereafter. Payments cannot be banked to be carried forward for future use. The total annual work requirement
for Quetico project after April 26, 2020 is $324 should the Company maintain the current size of the claims.
During
the year ended December 31, 2018, the Company spent a total of $2 (December 31, 2017 - $3) in license related expenditures on
the Section 35 Property.
Section 35 Property
On January 4, 2016, the Company entered into
a 10 year Metallic Minerals Lease (the “Lease”) with the Michigan Department of Natural Resources for an area comprised
of a number of acres. The terms of the Lease require an annual rental fee at a rate of US $3.00 per acre for years 1-5 and at a
rate of US $6.00 per acre for years 6-10. The Company shall pay a minimum royalty at a rate of US $10.00 per acre for the 11
th
year onwards, with an increase of an additional US $5.00 per acre per year up to a maximum of US $55.00 per acre per year. A production
royalty of between 2% - 2.5% is payable from production of minerals and/or mineral products from an established mining operation
area. The Company paid the first year rental fee and the required reclamation deposit of $14 (US $10). The Department of Natural
Resources shall annually review the level of the reclamation deposit and shall require the amount to be increased or decreased
to reflect changes in the cost of future reclamation of the leased premises.
Maniitsoq
The
Company has been granted certain exploration licenses, by the Bureau of Minerals and Petroleum (“BMP”) of Greenland
for exclusive exploration rights of an area comprising the Maniitsoq Property, located near Ininngui, Greenland. The Property
is subject to a 2.5% NSR. The Company can reduce the NSR to 1% by paying $2,000 on or before 60 days from the decision to commence
commercial production.
At
the expiration of the first license period, the Company may apply for a second license period (years 6-10), and the Company may
apply for a further 3-year license for years 11 to 13. Thereafter, the Company may apply for additional 3-year licenses for years
14 to 16, 17 to 19 and 20 to 22. The Company will be required to pay additional license fees and will be obligated to incur minimum
eligible exploration expenses for such years.
|
|
48
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
The
Company may terminate the licenses at any time; however any unfulfilled obligations according to the licenses will remain in force,
regardless of the termination.
Future
required minimum exploration expenditures will be adjusted each year on the basis of the change to the Danish Consumer Price Index.
During
the year ended December 31, 2018, the Company spent an aggregate of $13,586 (December 31, 2017 - $12,064) in exploration and license
related expenditures on the Maniitsoq Property, which is comprised of the Sulussugut, Ininngui and Carbonatite Licenses. Further
details on the licenses and related expenditures are outlined below.
Sulussugut
License (2011/54)
(All
references to amounts in Danish Kroners, “DKK” are in thousands of DKK)
Effective
August 15, 2011, the Company was granted an exploration license (the “Sulussugut License”) by the BMP of Greenland
for exclusive exploration rights of an area located near Sulussugut, Greenland. The Company paid a license fee of $6 (DKK 31)
upon granting of the Sulussugut License. The application for another 5 year term on the Sulussugut License was submitted to the
Greenland Mineral Licence & Safety Authority which was effective on April 11, 2016, with December 31, 2017 being the seventh
year. During the year ended December 31, 2016, the Company paid a license fee of $8 (DKK 40) which provides for renewal of the
Sulussugut License until 2020.
To
December 31, 2015, under the terms of a preliminary license, the Company completed the exploration requirements of an estimated
minimum of DKK 83,809 (approximately $15,808) between the years ended December 31, 2011 to 2015 by incurring $26,116 on the Sulussugut
License. The accumulated exploration credits held at the end to December 31, 2015, of DKK 100,304 can be carried forward until
2019. Under the terms of the second license period, the required minimum exploration expenditures for the year ended December
31, 2017 was DKK 44,374 (approximately $8,955). As of December 31, 2018, the Company has spent $55,732 on exploration costs for
the Sulussugut License.
To
December 31, 2018, the Company has completed all obligations with respect to required reduction of the area of the license.
During
the year ended December 31, 2018, the Company had approved exploration expenditures of DKK 79,604 (approximately $16,342)
which results in the total carried credits for the Sulussugut License at DKK 326,111 (approximately $66,951).
The
Company had no minimum required exploration for the year ended December 31, 2018.
During
the year ended December 31, 2018, the Company spent a total of $10,795 (December 31, 2017 - $11,079) in exploration and license
related expenditures on the Sulussugut License.
Ininngui
License (2012/28)
Effective
March 4, 2012, the Company was granted an exploration license (the “Ininngui License”) by the BMP of Greenland for
exclusive exploration rights of an area located near Ininngui, Greenland. The Company paid a license fee of $6 (DKK 32) upon granting
of the Ininngui License. The Ininngui License was valid for 5 years until December 31, 2016, with December 31, 2012 being the
first year. The Ininngui License is contiguous with the Sulussugut License.
To
December 31, 2018, the Company’s expenditures exceeded the minimum requirement and the Company has a total
cumulative credit of DKK 35,509 (approximately $7,290). The credits may be carried forward until December
31, 2021.
The
Company had no minimum required exploration for the year ended December 31, 2018. As of December 31, 2018, the Company
has spent $5,121 on exploration costs for the Ininngui License.
|
|
49
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
Should
the Company not incur the minimum exploration expenditures on the license in any one year from years 2-5, the Company may pay
50% of the difference in cash to BMP as full compensation for that year. This procedure may not be used for more than 2 consecutive
calendar years and as at December 31, 2018, the Company has not used the procedure for the license.
During
the year ended December 31, 2018, the Company spent a total of $1,423 (December 31, 2017 - $985) in exploration and license related
expenditures on the Ininngui License.
Carbonatite
License (2018/21)
Effective
May 4, 2018, the Company was granted an exploration license (the “Carbonatite License”) by the BMP of Greenland
for exclusive exploration rights of an area located near Maniitsoq in West Greenland. The Company paid a license fee of $7 (DKK
31) upon granting of the Carbonatite License. The Carbonatite License is valid for 5 years until December 31, 2022, with December
31, 2018 being the first year. As of December 31, 2018, the Company has spent $1,362 on exploration costs for the Carbonatite
License.
During
the year ended December 31, 2018, the Company spent a total of $1,369 in exploration and license related expenditures (December
31, 2017 - $Nil) for the Carbonatite License.
The
Company had a minimum required exploration obligation of DKK 269 (approximately $55) for the year ended December 31, 2018.
To December 31, 2018, the Company’s expenditures exceeded the minimum requirement and the Company has a total surplus
credit of DKK 9,840 (Approximately $2,018). The credit may be carried forward until December 31, 2021.
8.
TRADE PAYABLES AND ACCRUED LIABILITIES
|
|
December
31,
2018
|
|
|
December
31,
2017
|
|
Trade payables
|
|
|
477
|
|
|
|
813
|
|
Amounts due to related parties (Note
11)
|
|
|
1
|
|
|
|
42
|
|
Accrued liabilities
|
|
|
78
|
|
|
|
114
|
|
|
|
|
556
|
|
|
|
969
|
|
9.
LOAN PAYABLE
On
April 22, 2016, the Company issued a term note to Sentient Executive GP IV Limited (“Sentient”) and received a loan
of $4,500 (the “Loan”). The Loan was due on April 30, 2017 and was made on an interest free basis. Sentient is a significant
shareholder of the Company.
The
Company discounted the Loan at an interest rate of 15% per annum, being the estimated market rate. Accordingly, upon issuance,
the Company recorded an amount of $265 to reserves, which was to be amortized as interest expense over the term of the Loan.
Under
the terms of the Loan, Sentient had the right, at its option, to require early pre-payment in the event that, during the term
of the Loan, the Company successfully completed an issuance of common shares to third parties for gross proceeds of not less than
$2,000. In the event the maximum offering amount is raised, being $12,000, Sentient was required to be repaid the full loan of
$4,500. During the year ended December 31, 2016, the Company closed private placements (Note 10), which triggered full repayment
of the Loan. The Company repaid the Loan and, accordingly, the full amount of $265 was reallocated to share capital on settlement
and recorded on the statement of comprehensive loss as interest expense.
The
Company also issued Sentient 952,380 common shares, at a fair value of $95, as a finance fee for advancing the Loan.
|
|
50
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
10.
SHARE CAPITAL, WARRANTS AND OPTIONS
The
authorized capital of the Company comprises an unlimited number of common shares without par value and 100,000,000 Series 1 convertible
preferred shares without par value.
a)
Common shares issued and outstanding
2018
On
April 19, 2018, the Company closed a non-brokered private placement equity financing of 233,333,333 units at a price of $0.075
per unit and raised aggregate gross proceeds of $17,500. Each unit consists of one common share and one-half of one common share
purchase warrant of the Company. Each warrant will entitle the holder to acquire one common share of the Company at an exercise
price of $0.12 for a period of 24 months from its date of issuance. The Company incurred total share issuance costs of $579, of
which $250 is recorded in trade payables at December 31, 2018. The Company allocated a $2,572 fair value to the warrants issued
in conjunction with the private placement. The fair value of warrants was determined on a pro-rata basis using the Black-Scholes
Option Pricing Model with the following assumptions; expected life of 2 years, expected dividend yield of 0%, a risk-free interest
rate of 1.91% and an expected volatility of 94.26%.
Contemporary
Amperex Technology Limited (“CATL”) subscribed for 200,000,000 units of the aforementioned private placement for a
total purchase price of $15,000. At December 31, 2018, CATL beneficially owns, or exercises control or direction over approximately
25.38% of the currently issued and outstanding shares of the Company. As per the subscription agreement, CATL has pre-emptive
rights and the right to nominate one director to the board of directors of the Company.
Sentient
subscribed for 13,333,333 units of the aforementioned private placement for a total purchase price of $1,000. At December 31,
2018, Sentient beneficially owns, or exercises control or direction over 369,809,820 common shares constituting approximately
46.93% of the currently issued and outstanding shares of the Company.
As
at December 31, 2018, the Company has 787,928,500 common shares issued and outstanding, (December 31, 2017 – 554,595,167).
2017
On
June 8, 2017, the Company closed a brokered placement, through a prospectus, of units for total gross proceeds of $10,877. The
Company issued 145,030,833 units at a price of $0.075 per unit. Each unit consists of one common share in the capital of the Company
and one-half of one common share purchase warrant. Each warrant entitles the holder to acquire one common share at an exercise
price of $0.12 until June 8, 2019. The Company paid share issuance costs of $533 and also issued 1,965,093 agent’s warrants,
exercisable at $0.075 per warrant until June 8, 2019. The Company allocated a $1,500 fair value to the warrants issued in conjunction
with the private placement and $61 to agent’s warrants. The fair value of warrants was determined on a pro-rata basis using
the Black-Scholes Option Pricing Model with the following assumptions; expected life of 2 years, expected dividend yield of 0%,
a risk-free interest rate of 0.71% and an expected volatility of 98.60%. The Company also granted the agent an overallotment option
for a period of 30 days, which expired unexercised. The fair value of overallotment option of $39 was recorded as a share issuance
cost and was determined on a pro-rata basis using the Black-Scholes Option Pricing Model with the following assumptions; expected
life of 30 days, expected dividend yield of 0%, a risk-free interest rate of 0.71% and an expected volatility of 66.6%.
|
|
51
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
On
August 15, 2017, the Company closed a non-brokered private placement of units for total proceeds of $3,074. The Company issued
40,982,448 units at a price of $0.075 per unit. Each unit consists of one common share in the capital of the Company and one-half
of one common share purchase warrant. Each warrant entitles the holder thereof to acquire one common share at an exercise price
of $0.12 until August 15, 2019. The Company allocated a $519 fair value to the warrants issued from the private placement. Direct
financing costs totalled $16 resulting in net proceeds to the Company of $3,058. The fair value of warrants was determined on
a pro-rata basis using the Black-Scholes Option Pricing Model with the following assumptions; expected life of 2 years, expected
dividend yield of 0%, a risk-free interest rate of 1.23% and an expected volatility of 98.64%.
2016
On
April 28, 2016, the Company issued 952,380 common shares at a fair value of $95 as a finance fee.
On
July 21, 2016, the Company closed a private placement of 92,668,907 units at a price of $0.075 per unit for gross proceeds of
$6,950. Each unit consists of one common share of the Company and one half of one common share purchase warrant. Each whole warrant
entitles the purchaser to purchase an additional common share at a price of $0.12 per share until July 21, 2018. Share issuance
costs of $571 were incurred in connection with the private placement. The Company also issued 1,203,695 agent’s warrants,
exercisable at $0.075 per warrant until July 21, 2018. The Company allocated a fair value of $48 to the agent’s warrants
using the Black-Scholes Option Pricing Model with the following assumptions: expected life of 2 years, expected dividend yield
of 0%, a risk-free interest rate of 0.57% and an expected volatility of 91.06%. The Company also granted the agent an overallotment
option, which expired unexercised.
On
September 12, 2016, the Company closed a private placement and issued 67,331,093 units at a price of $0.075 per unit for gross
proceeds of $5,050. Each unit consists of one common share of the Company and one half of one common share purchase warrant. Each
whole warrant entitles the purchaser to purchase an additional common share at a price of $0.12 per share until September 12,
2018.
b)
Preferred shares issued and outstanding
As
at December 31, 2018, December 31, 2017 and December 31, 2016, there are 590,931 series 1 preferred shares outstanding.
The
rights and restrictions of the preferred shares are as follows:
|
i)
|
dividends
shall be paid at the discretion of the directors;
|
|
ii)
|
the
holders of the preferred shares are not entitled to vote except at meetings of the holders of the preferred shares, where
they are entitled to one vote for each preferred share held;
|
|
iii)
|
the
shares are convertible at any time after 6 months from the date of issuance, upon the holder serving the Company with 10 days
written notice; and
|
|
iv)
|
the
number of the common shares to be received on conversion of the preferred shares is to be determined by dividing the conversion
value of the share, $1 per share, by $0.90.
|
|
|
52
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
c)
Warrants
A
summary of common share purchase warrants activity during the years ended December 31, 2018, December 31, 2017 and December 31,
2016 is as follows:
|
|
December
31, 2018
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
Number
Outstanding
|
|
|
Weighted
Average Exercise Price ($)
|
|
|
Number
Outstanding
|
|
|
Weighted
Average Exercise Price ($)
|
|
|
Number
Outstanding
|
|
|
Weighted
Average Exercise Price ($)
|
|
Outstanding, beginning of
year
|
|
|
176,175,413
|
|
|
|
0.12
|
|
|
|
95,982,036
|
|
|
|
0.15
|
|
|
|
27,738,344
|
|
|
|
0.49
|
|
Issued
|
|
|
116,666,664
|
|
|
|
0.12
|
|
|
|
94,971,721
|
|
|
|
0.12
|
|
|
|
81,203,692
|
|
|
|
0.12
|
|
Cancelled / Expired
|
|
|
(34,869,241
|
)
|
|
|
0.12
|
|
|
|
(14,778,344
|
)
|
|
|
0.30
|
|
|
|
(12,960,000
|
)
|
|
|
0.71
|
|
Outstanding,
end of year
|
|
|
257,972,836
|
|
|
|
0.12
|
|
|
|
176,175,413
|
|
|
|
0.12
|
|
|
|
95,982,036
|
|
|
|
0.15
|
|
At
December 31, 2018, the Company had outstanding common share purchase warrants exercisable to acquire common shares of the Company
as follows:
Warrants
Outstanding
|
|
|
Expiry
Date
|
|
Exercise
Price
($)
|
|
|
Weighted
Average
remaining
contractual life
(years)
|
|
72,515,414
|
|
|
June 8, 2019
|
|
|
0.12
|
|
|
0.12
|
|
1,965,083
|
|
|
June 8, 2019
|
|
|
0.075
|
|
|
0.00
|
|
46,334,451
|
|
|
July 21, 2019
1,2
|
|
|
0.12
|
|
|
0.10
|
|
20,491,224
|
|
|
August 15, 2019
|
|
|
0.12
|
|
|
0.05
|
|
116,666,664
|
|
|
April 19, 2020
|
|
|
0.12
|
|
|
0.59
|
|
257,972,836
|
|
|
|
|
|
|
|
|
0.86
|
1
The warrants are subject to an acceleration clause such that if the volume-weighted average trading price of the Company’s
common shares on the TSX-V exceeds $0.18 per common share for a period of 10 consecutive trading days at any date before the expiration
date of such warrants, the Company may, at its option, accelerate the warrant expiry date to within 30 days. To December 31, 2018,
the Company’s common shares have not met the criterion for acceleration.
2
On September 1, 2018, the TSXV approved an extension of the term of the warrants from July 21, 2018 to July 21, 2019.
All other terms, including the exercise price, remain the same.
d)
Stock options
The
Company adopted a Stock Option Plan (the “Plan”), providing the authority to grant options to directors, officers,
employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. Under
the Plan, the exercise price of each option equals the market price or a discounted price of the Company’s stock as calculated
on the date of grant. The options can be granted for a maximum term of 10 years.
|
|
53
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
A
summary of option activity under the Plan during the years ended December 31, 2018, December 31, 2017 and December 31, 2016 is
as follows:
|
|
December
31, 2018
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
Number
Outstanding
|
|
|
Weighted
Average Exercise Price
|
|
|
Number
Outstanding
|
|
|
Weighted
Average Exercise Price
|
|
|
Number
Outstanding
|
|
|
Weighted
Average Exercise Price
|
|
Outstanding, beginning of
year
|
|
|
20,720,500
|
|
|
|
0.23
|
|
|
|
12,823,000
|
|
|
|
0.30
|
|
|
|
9,872,500
|
|
|
|
0.37
|
|
Issued
|
|
|
6,425,000
|
|
|
|
0.12
|
|
|
|
9,137,500
|
|
|
|
0.12
|
|
|
|
6,058,000
|
|
|
|
0.21
|
|
Cancelled / Expired
|
|
|
(1,200,000
|
)
|
|
|
0.18
|
|
|
|
(1,240,000
|
)
|
|
|
0.24
|
|
|
|
(3,107,500
|
)
|
|
|
0.34
|
|
Outstanding,
end of year
|
|
|
25,945,500
|
|
|
|
0.18
|
|
|
|
20,720,500
|
|
|
|
0.23
|
|
|
|
12,823,000
|
|
|
|
0.30
|
|
During
the year ended December 31, 2018, the Company granted 6,425,000 incentive stock options to employees, directors and consultants
with a maximum term of 5 years. All stock options vest immediately and are exercisable at $0.12 per common share. The Company
calculates the fair value of all stock options using the Black-Scholes Option Pricing Model. The fair value of option granted
amounted to $317 and was recorded as a share-based payments expense.
During
the year ended December 31, 2017, the Company granted 9,137,500 incentive stock options to employees, directors and consultants
with a maximum term of 5 years. All stock options vest immediately and are exercisable at $0.12 per common share. The Company
calculates the fair value of all stock options using the Black-Scholes Option Pricing Model. The fair value of this grant amounted
to $504 and was recorded as a share-based payments expense.
During
the year ended December 31, 2016, the Company granted 6,058,000 incentive stock options to employees, directors and consultants
with a maximum term of 5 years. The granting of these options resulted in a share-based payments expense of $278.
During
the year ended December 31, 2016, the Company recorded a further $31 in stock-based compensation for previously issued stock options
that vested during the year.
The
fair value of stock options granted and vested during the years ended December 31, 2018, December 31, 2017 and December 31, 2016
was calculated using the following assumptions:
|
|
December
31,
2018
|
|
|
December
31,
2017
|
|
|
December
31,
2016
|
|
Expected dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected share price volatility
|
|
|
96.9%
- 101
|
%
|
|
|
66.6%
- 100.6
|
%
|
|
|
111%
- 113
|
%
|
Risk free interest rate
|
|
|
2.04%
– 2.17
|
%
|
|
|
1.17%
– 1.80
|
%
|
|
|
0.68%
- 0.79
|
%
|
Expected life
of options
|
|
|
5
years
|
|
|
|
5
years
|
|
|
|
5
years
|
|
|
|
54
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
Details
of options outstanding as at December 31, 2018 are as follows:
Options
Outstanding
|
|
|
Options
Exercisable
|
|
|
Expiry
Date
|
|
Exercise
Price
($)
|
|
|
Weighted
average
remaining
contractual life
(years)
|
|
2,440,000
|
|
|
|
2,440,000
|
|
|
Jul 9, 2019
|
|
|
0.62
|
|
|
0.05
|
|
200,000
|
|
|
|
200,000
|
|
|
Aug 27, 2019
|
|
|
0.37
|
|
|
0.01
|
|
100,000
|
|
|
|
100,000
|
|
|
Sep 26, 2019
|
|
|
0.26
|
|
|
0.00
|
|
350,000
|
|
|
|
350,000
|
|
|
Nov 5, 2019
|
|
|
0.21
|
|
|
0.01
|
|
1,000,000
|
|
|
|
1,000,000
|
|
|
Dec 19, 2019
|
|
|
0.22
|
|
|
0.04
|
|
900,000
|
|
|
|
900,000
|
|
|
Feb 3, 2020
|
|
|
0.275
|
|
|
0.04
|
|
450,000
|
|
|
|
450,000
|
|
|
Oct 5, 2020
|
|
|
0.20
|
|
|
0.03
|
|
5,443,000
|
|
|
|
5,443,000
|
|
|
Jan 28, 2021
|
|
|
0.21
|
|
|
0.44
|
|
7,637,500
|
|
|
|
7,637,500
|
|
|
Feb 21, 2022
|
|
|
0.12
|
|
|
0.93
|
|
1,000,000
|
|
|
|
1,000,000
|
|
|
Dec 20, 2022
|
|
|
0.12
|
|
|
0.15
|
|
5,725,000
|
|
|
|
5,725,000
|
|
|
Feb 28, 2023
|
|
|
0.12
|
|
|
0.92
|
|
500,000
|
|
|
|
500,000
|
|
|
May 1, 2023
|
|
|
0.12
|
|
|
0.08
|
|
200,000
|
|
|
|
200,000
|
|
|
May 4, 2023
|
|
|
0.12
|
|
|
0.03
|
|
25,945,500
|
|
|
|
25,945,500
|
|
|
|
|
|
|
|
|
2.73
|
e)
Reserve
The
reserve records items recognized as stock-based compensation expense and other share-based payments until such time that the stock
options or warrants are exercised, at which time the corresponding amount will be transferred to share capital. Amounts recorded
for forfeited or expired unexercised options and warrants are transferred to deficit. During the year ended December 31, 2018
the Company recorded $317 of share-based payments (December 31, 2017 - $504) (December 31, 2016 - $309) to the reserve. During
the year ended December 31, 2018, the Company transferred $229 (December 31, 2017 - $301) (December 31, 2016 - $2,725) to deficit
for expired options and warrants.
During
the year ended December 31, 2016, the Company initially recorded an amount of $265 to the reserve, which was amortized as interest
expense over the term of the Loan and reallocated to share capital upon settlement.
11.
RELATED PARTY TRANSACTIONS
The
following amounts due to related parties are included in trade payables and accrued liabilities (Note 8):
|
|
December
31,
2018
|
|
|
December
31,
2017
|
|
Directors
and officers of the Company
|
|
|
1
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1
|
|
|
|
42
|
|
These
amounts are unsecured, non-interest bearing and have no fixed terms of repayment.
(a)
Related party transactions
2018
As
of December 31, 2018, Sentient beneficially owns 369,809,820 common shares constituting approximately 46.93% of the currently
issued and outstanding common shares. Note 10(a).
|
|
55
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
As
of December 31, 2018, CATL beneficially owns, or exercises control or direction over approximately 25.38% of the currently issued
and outstanding shares of the Company. CATL has pre-emptive rights and the right to nominate one director to the board of directors
of the Company. Note 10(a).
During
the year ended December 31, 2018, the Company recorded $174 (2017 - $244), (2016 - $347) in fees charged by a legal firm in which
the Company’s chairman is a consultant.
During
the year ended December 31, 2018, the Company recorded $Nil (2017 - $Nil) (2016 - $16) in rent and utilities expense to VMS Ventures
Inc. a company that was previously a significant shareholder through common directors, which was included in general and administrative
expense.
2017
On
August 15, 2017, Sentient subscribed for a total of 38,666,666 units under the private placement equity financing transaction
described in Note 10 for a total net proceeds of $2,900. As part of the subscription, Sentient was granted 19,333,333 common share
purchase warrants exercisable at $0.12 until August 15, 2019.
On
June 8, 2017, Sentient acquired 94,666,666 units in the equity financing as described in Note 10 for net proceeds of $7,100. As
part of the Offering, Sentient was granted 47,333,333 common share purchase warrants exercisable at $0.12 until June 8, 2019.
2016
During
the year ended December 31, 2016, the Company issued 952,380 common shares to Sentient for a fee for advancing the loan of $4,500
at a fair value of $95. The Company discounted the loan with the interest not being charged by Sentient using an interest rate
of 15% per annum and an amount of $265 was booked to capital contribution reserve. Note 9.
During
the year ended December 31, 2016, Sentient acquired 120,428,939 common shares. The common shares were acquired as to 952,380 common
shares at a fair value of $95 as a finance fee and 119,476,559 common shares as part of the private placements at a price of $8,960.
(b)
Key management personnel are defined as members of the Board of Directors and senior officers.
Key
management compensation was:
|
|
December
31,
2018
|
|
|
December
31,
2017
|
|
|
December
31,
2016
|
|
Geological consulting fees
– expensed
|
|
|
104
|
|
|
|
35
|
|
|
|
6
|
|
Geological consulting fees – capitalized
|
|
|
18
|
|
|
|
178
|
|
|
|
44
|
|
Management fees – expensed
|
|
|
747
|
|
|
|
749
|
|
|
|
756
|
|
Salaries - expensed
|
|
|
181
|
|
|
|
128
|
|
|
|
103
|
|
Share-based payments
|
|
|
192
|
|
|
|
358
|
|
|
|
186
|
|
Total
|
|
|
1,242
|
|
|
|
1,448
|
|
|
|
1,095
|
|
|
|
56
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
12.
SUPPLEMENTAL CASH FLOW INFORMATION
Changes
in working capital for the years ended December 31, 2018, 2017 and 2016 are as follows:
|
|
December
31,
2018
|
|
|
December
31, 2017
|
|
|
December
31,
2016
|
|
Decrease (increase) in accounts
receivables and current assets
|
|
|
84
|
|
|
|
(162
|
)
|
|
|
36
|
|
Decrease (increase) in prepaid expenses
|
|
|
19
|
|
|
|
46
|
|
|
|
(73
|
)
|
(Decrease) increase
in trade payables and accrued liabilities
|
|
|
(82
|
)
|
|
|
21
|
|
|
|
(15
|
)
|
Total
changes in working capital
|
|
|
21
|
|
|
|
(95
|
)
|
|
|
(52
|
)
|
During
the year ended December 31, 2018, the Company:
|
i)
|
transferred
$229 from reserve to deficit;
|
|
ii)
|
recorded
$250 of share issuance costs in trade payables; and
|
|
iii)
|
recorded
$186 in accrued exploration and evaluation expenditures.
|
During
the year ended December 31, 2017, the Company:
|
i)
|
transferred
$301 from reserve to deficit;
|
|
ii)
|
recorded
$39 in fair value of options to share issuance costs;
|
|
iii)
|
recorded
$61 in fair value of agent’s warrants to share issuance costs; and
|
|
iv)
|
recorded
$767 in accrued exploration and evaluation expenditures.
|
During
the year ended December 31, 2016, the Company:
|
i)
|
recorded
$265 to reserves, which was subsequently reallocated to share capital and amortized as interest expense over the term of the
Loan;
|
|
ii)
|
transferred
$2,725 from reserve to deficit;
|
|
iii)
|
recorded
$48 in fair value of agent’s warrants to share issuance costs; and
|
|
iv)
|
recorded
$34 in accrued exploration and evaluation expenditures.
|
13.
COMMITMENTS AND CONTINGENCIES
The
Company has certain commitments to meet the minimum expenditures requirements on its mineral exploration assets it has interest
in.
Effective
July 1, 2014, the Company had changes to management and entered into the following agreements for services with directors of the
Company and a company in which a director has an interest:
|
i)
|
Directors’
fees: $2 stipend per month for independent directors and $3 stipend per month for the chairman of the board, and $2.5 for
committee chairman.
|
|
|
|
|
ii)
|
Management
fees: $31 per month effective June 2018.
|
|
|
|
|
|
Effectively
on June 1, 2018, the Company has changed the terms with Keith Morrison, the CEO, from direct employment to contracted consultant
and entered into service agreement with his company.
|
Each
of the agreements shall be continuous and may only be terminated by mutual agreement of the parties, subject to the provisions
that in the event there is a change of effective control of the Company, the party shall have the right to terminate the agreement,
within sixty days from the date of such change of effective control, upon written notice to the Company. Within thirty days from
the date of delivery of such notice, the Company shall forward to the party the amount of money due and owing to the party hereunder
to the extent accrued to the effective date of termination.
|
|
57
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
14.
RISK MANAGEMENT
The
Company’s exposure to market risk includes, but is not limited to, the following risks:
Interest
Rate Risk
Interest
rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest
rates. The short term investments are held at highly-rated financial institutions and earn guaranteed fixed interest rate and
thus are not subject to significant changes in interest payments.
Foreign
Currency Exchange Rate Risk
Currency
risk is risk that the fair value of future cash flows will fluctuate because of changes in foreign currency exchange rates. In
addition, the value of cash and cash equivalents and other financial assets and liabilities denominated in foreign currencies
can fluctuate with changes in currency exchange rates.
The
Company operates in Canada and Greenland and undertakes transactions denominated in foreign currencies such as United States dollar,
Euros and Danish Krones, and consequently is exposed to exchange rate risks. Exchange risks are managed by matching levels of
foreign currency balances and related obligations and by maintaining operating cash accounts in non-Canadian dollar currencies.
The rate published by the Bank of Canada at the close of business on December 31, 2018 was 1.3630 USD to CAD, 1.5598 EUR to CAD
and 0.2089 DKK to CAD.
The
Company’s Canadian dollar equivalent of financial assets and liabilities that are denominated in Danish Krones consist of
accounts payable of $9 (2017 - $571) and $79 in USD currency (2017 - $56).
Credit
Risk
Credit
risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge
an obligation. The credit risk is primarily associated with liquid financial assets. The Company limits exposure to credit risk
on liquid financial assets by holding cash and cash equivalents and short term investments at highly-rated financial institutions.
Price
Risk
The
Company is exposed to price risk with respect to commodity prices. Commodity price risk is defined as the potential adverse impact
on earnings and economic value due to commodity price movements and volatilities. To mitigate price risk, the Company closely
monitors commodity prices of precious metals and the stock market to determine the appropriate course of action to be taken by
the Company.
Liquidity
Risk
Liquidity
risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that
are settled by delivering cash or another financial asset. The Company manages the liquidity risk inherent in these financial
obligations by regularly monitoring actual cash flows to annual budget which forecast cash needs and expected cash availability
to meet future obligations.
The
Company will defer discretionary expenditures, as required, in order to manage and conserve cash required for current liabilities.
|
|
58
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
The
following table shows the Company’s contractual obligations as at December 31, 2018:
As
at December 31, 2018
|
|
Less
than
1
year
|
|
|
1
- 2 years
|
|
|
2
- 5 years
|
|
|
Total
|
|
Trade
and accrued liabilities
|
|
|
556
|
|
|
|
-
|
|
|
|
-
|
|
|
|
556
|
|
|
|
|
556
|
|
|
|
-
|
|
|
|
-
|
|
|
|
556
|
|
Capital
Risk Management
The
Company manages its capital to ensure that it will be able to continue as a going concern, so that adequate funds are available
or are scheduled to be raised to carry out the Company’s exploration program and to meet its ongoing administrative and
operating costs and obligations. This is achieved by the Board of Directors’ review and ultimate approval of budgets that
are achievable within existing resources, and the timely matching and release of the next stage of expenditures with the resources
made available from capital raisings and debt funding from related or other parties. In doing so, the Company may issue new shares,
restructure or issue new debt.
The
Company is not subject to any externally imposed capital requirements imposed by a regulator or a lending institution.
In
the management of capital, the Company includes the components of equity, loans and borrowings, other current liabilities, net
of cash and cash equivalents.
|
|
As
at December 31,
|
|
|
|
2018
|
|
|
2017
|
|
Equity
|
|
|
66,944
|
|
|
|
52,728
|
|
Current liabilities
|
|
|
556
|
|
|
|
969
|
|
|
|
|
67,500
|
|
|
|
53,697
|
|
Cash and cash equivalents
|
|
|
(339
|
)
|
|
|
(398
|
)
|
Short term
investments
|
|
|
(2,500
|
)
|
|
|
(2,500
|
)
|
|
|
|
64,661
|
|
|
|
50,799
|
|
15.
FINANCIAL INSTRUMENTS
Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value hierarchy establishes six levels to classify the inputs to valuation techniques
used to measure the fair value.
The
three levels of the fair value hierarchy are:
Level
1 – Unadjusted quoted prices in active markets for identical assets or liabilities
Level
2 – Inputs other than quoted prices that are observable either directly or indirectly
Level
3 – Inputs that are not based on observable market data
16.
SEGMENTED INFORMATION
The
Company operates in one reportable operating segment being that of the acquisition, exploration and development of mineral properties
in three geographic segments being Canada, Greenland and United States (Note 7). The Company’s geographic segments are as
follows:
|
|
59
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
|
|
December
31,
2018
|
|
|
December
31,
2017
|
|
Equipment
|
|
|
|
|
|
|
|
|
Canada
|
|
|
11
|
|
|
|
19
|
|
Greenland
|
|
|
24
|
|
|
|
30
|
|
Total
|
|
|
35
|
|
|
|
49
|
|
|
|
December
31,
2018
|
|
|
December
31, 2017
|
|
Exploration and evaluation assets
|
|
|
|
|
|
|
|
|
Canada
|
|
|
2,214
|
|
|
|
1,817
|
|
Greenland
|
|
|
62,257
|
|
|
|
48,671
|
|
United
States
|
|
|
8
|
|
|
|
6
|
|
Total
|
|
|
64,479
|
|
|
|
50,494
|
|
17.
INCOME TAXES
A
reconciliation of the expected income tax recovery to the actual income tax recovery is as follows:
|
|
Year
ended December 31,
2018
|
|
|
Year
ended December 31,
2017
|
|
Net loss
|
|
$
|
(3,022
|
)
|
|
$
|
(2,879
|
)
|
Statutory tax
rate
|
|
|
27
|
%
|
|
|
26.0
|
%
|
Expected income tax recovery at the
statutory tax rate
|
|
|
(816
|
)
|
|
|
(749
|
)
|
Permanent differences and other
|
|
|
62
|
|
|
|
(2
|
)
|
Effect of change in tax rates
|
|
|
(132
|
)
|
|
|
|
|
Change in valuation
allowance
|
|
|
886
|
|
|
|
751
|
|
Net deferred
Income tax recovery
|
|
$
|
-
|
|
|
$
|
-
|
|
The
significant components of the Company’s deferred income tax assets and liabilities are as follows:
|
|
December
31,
2018
|
|
|
December
31,
2017
|
|
Exploration and evaluation
assets
|
|
$
|
65
|
|
|
$
|
18
|
|
Loss carry-forwards
|
|
|
3,823
|
|
|
|
3,048
|
|
Share issuance costs
|
|
|
293
|
|
|
|
237
|
|
Cumulative eligible capital
|
|
|
34
|
|
|
|
32
|
|
Equipment
|
|
|
98
|
|
|
|
93
|
|
|
|
|
4,313
|
|
|
|
3,428
|
|
Valuation
allowance
|
|
|
(4,313
|
)
|
|
|
(3,428
|
)
|
Net deferred
tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The
tax pools relating to these deductible temporary differences expire as follows:
|
|
Canadian
non-capital
losses
|
|
|
Canadian
net-capital losses
|
|
|
Canadian
resource pools
|
|
|
Canadian
share
issue costs
|
|
2030
|
|
$
|
696
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
2031
|
|
|
517
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2032
|
|
|
645
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2033
|
|
|
847
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2034
|
|
|
1,484
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2035
|
|
|
2,141
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2036
|
|
|
2,213
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2037
|
|
|
2,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2038
|
|
|
2,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No expiry
|
|
|
-
|
|
|
|
57
|
|
|
|
50,575
|
|
|
|
912
|
|
|
|
$
|
14,103
|
|
|
$
|
57
|
|
|
$
|
50,575
|
|
|
$
|
912
|
|
|
|
60
| North American Nickel / YEAR END 2018
|
Notes
to the Consolidated Financial Statements
For
the year ended December 31, 2018
(Expressed
in thousands of Canadian dollars, except per share amounts)
18.
GENERAL AND ADMINISTRATIVE EXPENESS
Details
of the general and administrative expenses by nature are presented in the following table:
|
|
December 31, 2018
|
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
Consulting fees
|
|
|
373
|
|
|
|
343
|
|
|
|
218
|
|
Professional fees
|
|
|
142
|
|
|
|
129
|
|
|
|
128
|
|
Management fees
|
|
|
733
|
|
|
|
715
|
|
|
|
756
|
|
Investor relations
|
|
|
187
|
|
|
|
239
|
|
|
|
221
|
|
Filing fees
|
|
|
79
|
|
|
|
106
|
|
|
|
77
|
|
Salaries and benefits
|
|
|
474
|
|
|
|
439
|
|
|
|
290
|
|
General office expenses
|
|
|
352
|
|
|
|
404
|
|
|
|
331
|
|
Total
|
|
|
2,340
|
|
|
|
2,375
|
|
|
|
2,021
|
|
|
|
61
| North American Nickel / YEAR END 2018
|
Premium Nickel Resources (PK) (USOTC:WSCRF)
과거 데이터 주식 차트
부터 5월(5) 2024 으로 6월(6) 2024
Premium Nickel Resources (PK) (USOTC:WSCRF)
과거 데이터 주식 차트
부터 6월(6) 2023 으로 6월(6) 2024