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, 2014
Business Overview: The Company is a mineral exploration company focused on nickel-copper-platinum group metal (PGM) properties in the Sudbury, Ontario nickel belt (Post Creek and Halcyon properties) and the Maniitsoq project in Greenland (Sulussugut and Ininngui licenses). The Company has no commercial production and generates no operating revenue. Its primary activity is exploration and evaluation.
Key Financial Metrics
| Metric | 2014 (CAD) | 2013 (CAD) |
|---|---|---|
| Net Operating Revenues | $0 | $0 |
| Net Loss | $(3,741,007) | $(1,260,301) |
| Loss Per Share (Basic & Diluted) | $(0.02) | $(0.01) |
| Total Assets | $27,050,038 | $18,715,919 |
| Exploration & Evaluation Assets | $20,617,754 | $12,341,616 |
| Cash and Cash Equivalents | $326,117 | $278,919 |
| Short-term Investments | $6,000,000 | $6,000,000 |
| Working Capital | $6,106,599 | $6,300,587 |
| Accumulated Deficit | $(21,715,130) | $(17,974,123) |
| Common Shares Outstanding | 169,964,679 | 140,576,584 |
Note: All figures are expressed in Canadian Dollars (CAD) unless otherwise noted. The Company has no debt.
Material Changes vs. Prior Period
- Increased Net Loss: The net loss increased significantly from $1.26 million in 2013 to $3.74 million in 2014. This was primarily driven by a substantial increase in share-based compensation expenses ($2.28 million in 2014 vs. $0.18 million in 2013) and a foreign exchange loss of $314,872.
- Capital Raise: In May 2014, the Company closed a private placement of 28,424,152 shares at $0.33 per share, raising gross proceeds of $9.38 million. This increased share capital and diluted existing shareholders.
- Asset Growth: Total assets grew by approximately $8.3 million, largely due to capitalized exploration expenditures of $8.26 million, primarily on the Greenland Maniitsoq project.
- Management Changes: The Company underwent significant management changes in 2014, including the resignation of the CEO and Chairman in June 2014 and the appointment of Keith Morrison as CEO in December 2014.
Outlook, Risks, and Management Commentary
- Going Concern: The Company's auditors have raised substantial doubt about its ability to continue as a going concern. The Company has a history of operating losses and requires additional financing to fund exploration and administrative costs. The financial statements do not include adjustments that might result from this uncertainty.
- Exploration Progress:
- Greenland (Maniitsoq): The Company completed 8,773 meters of drilling in 2014. Significant intersections of nickel-copper sulphides were reported at Imiak Hill, Spotty Hill, and regional targets. The Company holds significant credits against future exploration expenditure requirements for both the Sulussugut and Ininngui licenses.
- Canada (Sudbury): Exploration continues on the Post Creek and Halcyon properties. The Company decided to let the Thompson North property claims lapse in 2014.
- Risk Factors:
- Speculative Nature: The Company has no viable commercial business; investment is highly speculative.
- Liquidity: Limited funds and no assurance of accessing additional capital.
- Market Risk: Shares are thinly traded on the OTCBB and TSX-V, subject to "penny stock" regulations, making resale difficult.
- Management Expertise: Risks associated with management's limited mining expertise.
- Subsequent Events: In early 2015, the Company issued shares upon the exercise of warrants and options and entered into an agreement to acquire the Seqi Port in Greenland.
Key Facts for Investor Verification
- Going Concern Status: Verify the Company's ability to secure the additional financing required to meet its exploration commitments and administrative costs, given the auditor's qualification.
- Share-Based Compensation: Review the impact of the $2.28 million share-based compensation expense on future dilution and cash flow.
- Exploration Results: Assess the technical validity and economic potential of the nickel-copper intersections reported in Greenland and Sudbury, noting that no mineral reserves have been determined.
- License Obligations: Confirm the Company's ability to meet future minimum exploration expenditure requirements for its Greenland licenses, although it currently holds significant credits.
- Related Party Transactions: Examine the $216,877 owed to related parties and the significant management fees paid to directors and related entities.