Business Context and Reporting Period
Company: North American Nickel Inc. (formerly Widescope Resources Inc.)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2013
Jurisdiction: British Columbia, Canada
Business Overview: The Company is a mineral exploration entity focused on nickel, copper, and platinum group metals (PGM). Its primary assets are exploration properties in the Sudbury and Thompson Nickel Belts (Canada) and the Maniitsoq project (Greenland). The Company has no commercial production and generates no operating revenue.
Key Financial Metrics (Year Ended Dec 31, 2013)
| Metric | 2013 (CAD) | 2012 (CAD) |
|---|---|---|
| Net Operating Revenues | $0 | $0 |
| Net Loss | $(1,260,301) | $(1,453,562) |
| Loss Per Share (Basic & Diluted) | $(0.01) | $(0.02) |
| Total Assets | $18,715,919 | $9,009,702 |
| Cash and Cash Equivalents | $278,919 | $661,245 |
| Short-term Investments | $6,000,000 | $705,218 |
| Working Capital | $6,300,587 | $(N/A - derived from current assets/liabilities) |
| Accumulated Deficit | $(17,974,123) | $(16,713,822) |
| Common Shares Outstanding | 140,576,584 | 80,560,193 |
Note: All figures are expressed in Canadian Dollars (CAD) unless otherwise noted. The Company reported no debt obligations in the form of interest-bearing loans.
Material Changes vs. Prior Period
- Capital Structure: The Company significantly increased its share capital through a non-brokered private placement in April 2013, issuing 41,494,692 units at $0.17 per unit for proceeds of $7,054,098. This increased outstanding shares by approximately 75% compared to 2012.
- Asset Base: Total assets more than doubled from $9.0 million in 2012 to $18.7 million in 2013, driven primarily by the capitalization of exploration expenditures on the Greenland (Maniitsoq) project and the increase in short-term investments.
- Exploration Expenditures: The Company incurred approximately $4.98 million in cash expenditures on exploration and evaluation assets in 2013, compared to $3.11 million in 2012. Significant drilling and geophysical surveying were conducted in Greenland.
- Asset Impairment: The Company decided to discontinue the Thompson North property in Manitoba, resulting in a full write-off (impairment) of $253,090. The South Bay and Cedar Lake properties were also written off in the prior year.
- Liquidity: While cash on hand decreased from $661,245 to $278,919, the Company held $6.0 million in short-term investments (GICs), resulting in a positive working capital position of $6.3 million.
Outlook, Risks, and Management Commentary
Going Concern Uncertainty
The auditors have included an "Emphasis of Matter" paragraph regarding the Company's ability to continue as a going concern. The Company has a history of operating losses and no revenue. Continuation of operations is dependent on the successful completion of additional financing and the realization of value from exploration assets.
Exploration Progress
- Greenland (Maniitsoq): The Company met its minimum expenditure requirements for the Sulussugut and Ininngui licenses. Significant discoveries were announced in 2013, including high-grade nickel-copper mineralization at Imiak Hill, Spotty Hill, and Imiak North. The Company identified 100 new electromagnetic targets in late 2013.
- Canada: The Company is pursuing options on the Post Creek and Halcyon properties in Sudbury. It elected to let the Thompson North claims lapse in 2014.
Key Risks
- Capital Access: The Company requires additional capital to fund ongoing exploration and administrative costs. There is no assurance that financing will be available on acceptable terms.
- Speculative Nature: The Company has no viable commercial business or proven reserves. The value of shares is dependent on future prospects rather than current earnings.
- Liquidity of Shares: The stock is thinly traded on the OTC Bulletin Board and TSX Venture Exchange, subject to "penny stock" regulations, which may limit the ability of shareholders to sell shares.
- Management Expertise: The filing notes that management has limited direct mining expertise, posing a risk of capital misallocation.
Investor Verification Checklist
- Capital Sufficiency: Verify if the $6.3 million working capital (including $6M in GICs) is sufficient to meet the minimum expenditure requirements for the Greenland licenses (approx. DKK 26M annually) and administrative costs for the next 12-18 months.
- Exploration Results: Review the technical reports (NI 43-101) regarding the Imiak Hill and Spotty Hill discoveries to assess the grade, tonnage, and continuity of the mineralization.
- Dilution Risk: Monitor the exercise of the 25.4 million outstanding warrants and 8.1 million stock options, which could significantly dilute existing shareholders.
- License Compliance: Confirm that the Company continues to meet the strict expenditure and reporting requirements of the Greenland Bureau of Minerals and Petroleum to avoid license forfeiture.
- Related Party Transactions: Review the $135,000 in management fees and $126,000 in consulting fees paid to directors and related entities to ensure fair value.