UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 000-14740
North American Nickel Inc. (formerly Widescope Resources Inc.)
(Exact name of Registrant as specified in its charter)
Province of British Columbia, Canada
(Jurisdiction of incorporation or organization)
#208 - 828 Harbourside Drive, North Vancouver, British Columbia, Canada V7P 3R9
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Common Shares, no par value
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act. None
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common shares as of the close of the period covered by the annual
report:
6,113,642 inclusive of the conversion of the outstanding Series 1
Convertible Preferred Shares
Indicate by check mark if the registrant is a well-known seasoned issuer.
[ ] Yes [X] No
If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934. [ ] Yes [X] No
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.
[ ] Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer
Indicate by check mark which financial statement item the registrant has elected
to follow. [X] Item 17 [ ] Item 18
If this is an annual report, indicate by check mark whether the registrant is a
shell company as defined in Rule 12b-2 of the Exchange Act. [ ] Yes [X] No
Unless otherwise indicated, all references herein are expressed in Canadian
dollars and United States currency is stated as "U.S.$__________."
THIS SUBMISSION SHOULD BE CONSIDERED IN CONJUNCTION WITH PREVIOUSLY FILED FORMS
20-F AND 6-K. THE AUDITED FINANCIAL STATEMENTS AND NOTES THERETO ATTACHED ARE AN
INTEGRAL PART OF THIS SUBMISSION.
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 selected financial data has been extracted from the consolidated
financial statements for the last five years prepared pursuant to Canadian
generally accepted accounting principles ("GAAP"). Where material differences
exist between Canadian and US GAAP, corresponding comparison data has been
provided in US GAAP for clarity.
North American Nickel Inc. (formerly Widescope Resources 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.
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 each two (2) old
shares being equal to one (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. All references
to common shares, stock options, warrants and weighted average number of shares
outstanding in this Form 20-F reflect the share consolidation unless otherwise
noted. The net effect of the above was to reduce the existing outstanding common
shares from 10,883,452 to 5,441,726.
The Company has arranged two non-brokered private placements. The first will
consist of 10,000,000 post-consolidation shares at $0.05. The second will
consist of 10,000,000 post-consolidation units at $0.06. Each unit consists of
one post consolidation share and one non-transferrable warrant to purchase an
additional post-consolidation common share at $0.10 for 30 months after closing.
The warrants may be subject to earlier expiry. Both private placements are
expected to close prior to May 15, 2010.
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North American Nickel Inc. (formerly Widescope Resources Inc.)
Selected Financial Data in accordance with United States GAAP
(Expressed in Canadian Dollars)
Years Ended December 31,
2009 2008 2007 2006 2005
---------- ---------- ---------- ---------- ----------
Net operating revenues $ 0 0 0 9,689 0
Loss from continued operations $ (35,773) (59,776) (56,820) (370,305) (54,804)
Income from discontinued operations $ N/a N/a N/a N/a N/a
Net loss $ (35,773) (59,776) (56,820) (370,350) (54,804)
Comprehensive loss $ (11,248) (59,776) (56,820) (370,350) (54,804)
Loss per share from continued
operations $ (0.02) (0.02) (0.01) (0.03) (0.01)
Income per share from
discontinued operations $ N/a N/a N/a N/a N/a
Income per share after
discontinued operations $ N/a N/a N/a N/a N/a
Share capital $ 13,649,333 13,649,333 13,649,333 13,649,333 13,499,333
Common shares issued 5,441,726 5,441,726 5,441,726 5,441,726 4,941,726
Weighted average shares outstanding 5,441,726 5,441,726 5,441,726 5,191,726 4,542,045
$
Total assets 83,212 46,312 74,339 110,607 218,438
$
Net assets (liabilities) (102,535) (106,684) (104,642) (44,086) 176,219
Convertible debentures(current $
and long term portions) N/a N/a N/a N/a N/a
Cash dividends declared per $
common share 0 0 0 0 0
Exchange rates (Cdn$ to U.S.$) $
period average 0.8757 0.9371 0.9304 0.8818 0.8253
Exchange rates (CDN$ to U.S.$)
for most recent six months
Period High Period Low
----------- ----------
October 2009 $ 0.9716 0.9221
November 2009 $ 0.9560 0.9282
December 2009 $ 0.9611 0.9334
January 2010 $ 0.9755 0.9384
February 2010 $ 0.9597 0.9316
March 2010 $ 0.9888 0.9596
Exchange rate (CDN$ to U.S.$)
April 23, 2010 $ 1.0009
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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
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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
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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.
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 each two (2) old shares being equal to one (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 accompanying financial statements reflect the share consolidation
unless otherwise noted. The Company is currently in good standing under the laws
of British Columbia. The registered and records office of the Company are
located at #1750 - 1185 West Georgia Street, Vancouver, B.C. Canada V6E 4E6 and
6
the Company's principal executive offices are located at #208 - 828 Harbourside
Drive North Vancouver, B. C. V7P 3R9, telephone 604-904-8481.
During 2004 alternatives in the resource sector were explored. Oil and gas
projects were investigated, and one in particular was the subject of
considerable attention. Increasing energy prices brought with them increasing
expectations on the part of the owners of that project, ultimately causing
interest to wane. Precious metals projects continued to be reviewed as the entry
cost was deemed to be lower, and expenditures in minerals exploration appeared
to be more controllable. Toward the end of 2004, the Directors were
contemplating making a proposal on one particular project.
A proposal was made on a precious metals mining prospect in 2005. The precious
metals prospect wass comprised of some 2800 hectares in the Rice Lake Mining
area of the Province of Manitoba, Canada. The property is just over 3 miles from
a mine that had produced over 1.3 million ounces of gold before being closed
because it became uneconomic at $35 per ounce gold. (This mine has now been
reopened.) The company carried out early stage geological and related work
during 2005, through an investment in the company owning the mining claims.
In 2006 further work was done on the prospect, In accordance with the terms of
the agreement with the owners of the prospect the cost of work done effectively
resulted in the company acquiring ownership in the company owning the prospect.
This, combined with the exercise of an option agreement with one of the owners,
results in Widescope now owning just over 65% of the company owning the
prospect.
In 2007 due to unavailability of qualified personnel no significant work was
undertaken on the claims in the Rice Lake Mining area.
In 2008, world economic conditions abruptly curtailed access to new capital. No
significant work was undertaken in order to preserve the company's limited
capital. 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. These actions were reported in a news
release dated April 6, 2010.
B. BUSINESS OVERVIEW
In April 2005 the Company entered into a subscription agreement to invest
$200,000 into Outback Capital Inc. dba Pinefalls Gold ("PFG") a private Alberta
company with certain directors and a principal shareholder of PFG in common with
the Company.
As of April 23, 2010 the Company's owns 65.42% of the common shares of PFG. The
Company has entered into an agreement with an independent third party that will
result in it divesting its interest in Outback Capital Inc., and its remaining
interest in the Rice Lake properties.
Between 2005 and 2008 PFG actively explored for mineral resources on its mining
claims in the area of Bissett, Manitoba. The claims are included in the Rice
Lake greenstone belt and cover an area of approximately 2800 hectares. The
claims are the subject of Qualifying Reports dated May 1, 2006 and June 30, 2004
prepared by Edward Sawitzky, P. Geo. of Arc Metals Ltd. ("Arc"). Arc prepared
the report to standards dictated by National Instrument 43-101.
Following the recommendations of the May 2006 Qualifying Report - during the
summer of 2006 an exploration program was completed under PFG's direction. The
primary focus of the work plan was to complete more detailed geological mapping
of the claims, stripping of over-burden and grab sampling. Approximately 30
man-days of field work were completed and more than seventy samples were
7
collected and delivered to TSL Laboratories in Saskatoon for assay and analysis.
Subsequent to the year-end the Company has received the detailed geologist's
maps, data and assay results. Review of these materials plus the detailed report
of the activities, findings and recommendations are under review by the Company.
This review, and a small amount of professional work represent the total of the
progress made in 2007, to some extent due to the inability to attract a
geologist to the short work window the Company wanted.
Although the Company remains optimistic about the prospect for discovery of a
definable mineral resource on its claims in Manitoba in 2009 it decided to
option-out its rights to Cougar Further groundwork will be required to elevate
the status of the claims to drill-ready. Cautious optimism was gained from the
reported success of the local San Gold Corp., in extending existing gold bearing
veins and discovering new ones, by deeper drilling below their existing San
Antonio mine site.
In conducting its business operations, the Company is not dependent on any
patented or license processes, technology, industrial, commercial or financial
contract or new manufacturing processes.
The Company competes with other exploration companies, some of which have
greater financial resources and technical facilities, for the acquisition of
mineral interests, as well as for the recruitment and retention of qualified
employees. Exploration in Manitoba has experienced a dramatic revival in recent
years and increased activity is forecast for the future. We compete for
qualified employees with other Canadian companies, including Harvest Gold Corp.,
Grandview Gold Inc., and San Gold Corp. amongst others.
With the dramatic and possibly unprecedented contraction of global financial
markets experienced in 2008, a tidal wave of qualified people became available.
Suddenly, capital became unavailable. Exploration companies everywhere reduced
overhead. There is little evidence that this situation is improving.
Access to capital eased marginally toward the latter part of 2009 and beyond.
More capital became available, and enthusiasm for mining projects increased at
much the same time. The latter because of expectations of increased inflation,
bringing increased demand for precious metals. And because of the expectation of
an increasing demand for base metals from Asia.
To focus on the expected increased demand for base metals, the Company has into
agreements to acquire rights to four properties in the Sudbury Ontario nickel
belt, and one agreement to acquire 100% ownership of another property in the
area of the Thompson Manitoba nickel belt. As part of this change in focus, the
Company has entered into an arms length agreement to divest of its interest in
Outback Capital Inc., and through this, its interest in the Pine Falls Manitoba
gold properties.
The Company has arranged two non-brokered private placements to finance working
capital and the first exploration work at Post Creek and Bell Lake in the
Sudbury nickel belt. It has also attracted four new directors, each with
significant experience in mineral exploration, to replace three previous
directors, and add one additional director.
C. 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. The Company has
entered into an agreement with an arms length entity that will result in it
divesting of its interest in Outback Capital Inc.
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D. PROPERTY, PLANTS AND EQUIPMENT.
The Company's head office and principal facility, which is leased, is located at
828 Harbourside Drive, North Vancouver.
The Company through its 65% ownership of PFG, has interests in the fourteen
mineral claims referenced above. During April 2009 PFG entered into an Option
and Purchase and Sale Agreement with Cougar Minerals Corp. ("Cougar"), whereby
Cougar was granted an option to purchase the fourteen remaining Bissett area
mineral claims for total consideration of $180,000. Cougar's payments to PFG
will be made as follows: $10,000 (paid) and the issuance of 500,000 common
shares at an estimated fair value of $25,000 ($0.05 per share) immediately, in
consideration of the grant of the option; and upon exercise of the option Cougar
may elect to acquire a 100-per-cent interest by payments of further annual
purchase payments of $25,000, $50,000 and $70,000 by April 30, 2010, 2011, and
2012, respectively with the subsequent purchase payments secured by a Promissory
Note issued by Cougar to PFG.
The Company has entered into 4 agreements to acquire rights to the Post Creek,
Bell Lake, Woods Creek and Halcyon properties in the Sudbury, Ontario nickel
belt; and an agreement to acquire 100% ownership of the high-grade Ni-Cu-PGE
South Bay property near Thompson and the large grassroots Thompson North and
Cedar Lake properties, which are part of the world-class Thompson Nickel Belt.
SUDBURY NICKEL PROPERTIES:
POST CREEK: The property is located 35 km east of Sudbury in Norman and Parkin
townships and consists of 35 contiguous unpatented mining claims and one
isolated claim covering an area of 688 hectares. It is strategically located
adjacent to the producing Podolsky copper-nickel-platinum group metal deposit of
FNX Mining. The property lies along the extension of the Whistle Offset Dyke
Structure which is a major geological control for Ni-Cu-PGM mineralization. This
structure hosted the former INCO Whistle Offset copper-nickel-PGM Mine (5.7
million tons grading 0.33% Cu, 0.95% Ni and 3.77 g/t total platinum metals as
well as the Podolsky North and Podolsky 2000 copper-precious metal deposits. FNX
forecast the production of 372,049 tons of ore at Podolsky yielding 1.8 million
pounds of payable nickel, 28.5 million pounds of payable copper and 27,300
ounces of payable platinum, palladium and gold for 2009. Previous operators
located the extension of the Whistle Offset Dyke structure on the Post Creek
property as a direct result of their geological, geophysical and Mobile Metal
Ion geochemical surveys. Drilling on this structure intersected a 0.66 m near
solid to solid sulphide zone with 0.48% copper, 0.08% nickel, 53 parts per
billion (ppb) palladium, 34 ppb platinum and 20 ppb gold. A rock sample
collected along the structure assayed 0.83% Ni, 0.74% Cu, 0.07% Co, 2241 ppb Pt
and 1051 ppb Pd. Significant potential for nickel-copper-PGM is demonstrated on
the Post Creek property.
A NI 43-101 compliant Technical Report has been commissioned, with Dr. Walter
Peredery, formerly of INCO, as the author.
BELL LAKE: The Bell Lake property is a 256 acre property that covers
approximately 1 km of the Mystery Offset Dyke or "MOD". The MOD is interpreted
to be an extension of the Worthington Offset Dyke which is a 10-11 km long
mineralized structure that extends from the southwest margin of the Sudbury
Igneous Complex. Offset Dyke environments are significant hosts to
nickel-copper-PGM mineralization in the Sudbury Basin. The Worthington Offset
Dyke hosts the past producing Worthington Mine and the Victoria Mine (1.5
million tons of 2.2% copper, 1.5% nickel and 2.3 g/t total precious metals). It
is also host to Vale Inco's Totten Mine development (10.1 million tons at 1.5%
nickel, 2% copper and 4.8 g/t platinum group metals). Crowflight Minerals
AER-Kidd property also occurs within the Worthington Offset. The Bell Lake
9
property is marked by surface exposures of disseminated to near-solid
nickel-copper sulphide mineralization with PGM values. The Mystery Offset Dyke
offers excellent exploration potential for the discovery of additional
nickel-copper-PGM mineralization. Deep-looking ground geophysical technologies
and diamond drilling will test the property after detailed geological mapping
has been undertaken on the property.
HALCYON: The property is located 35 Km NNE of Sudbury in the SE corner of Parkin
Twp, and consists of 46 unpatented mining claims. It is readily accessible by
paved and all-weather gravel road. Halcyon is adjacent to the Post Creek
property and contains the extension of the metallogenetically significant
Whistle Offset Structure. It is approximately 2 km north of the producing
Podolsky Mine of FNX Mining. Previous operators on the property defined numerous
conductive zones based on induced polarization (I.P.) 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 Jon Smith Mine (nickel-copper-cobalt-platinum) is situated
1 Km North of the property.
WOODS CREEK: The Woods Creek claim block is located in Hyman Township about 50
km west of Sudbury and comprises eight contiguous unpatented mining claims
covering 1,264 hectares. The target on the property is disseminated to
near-solid nickel-copper-cobalt-PGM mineralization hosted within Nipissing
Diabase dykes which cover 50% of the property. This style of mineralization is
currently being mined by Ursa Major Minerals at their Shakespeare deposit 15 km
southwest of the Woods Creek property. It contains 7,301,000 tons grading 0.37%
Ni, 0.39% Cu, 0.024% Co, 0.37 g/t Pt, 0.40 g/t Pd and 0.20 g/t Au.
Previous operators defined a number of mineralized zones on the Woods Creek
property, but little follow-up exploration was undertaken. The Main Zone
prospect is a zone of 10-40% pyrrhotite-chalcopyrite mineralization that assayed
1.22% Cu, 0.95% Ni, 354 ppb combined Pt and Pd and 136 ppb Au. Diamond drilling
on this zone intersected a 6.5 m section of gabbro with pyrrhotite and
chalcopyrite that assayed up to 1.09% Ni, 0.37% Cu, 301 ppb combined Pt and Pd
and 1110 ppm Co (0.11%). The Ravenshill prospect was discovered in 2005 as a
result of geological mapping and prospecting. It comprises near solid pyrrhotite
and chalcopyrite in brecciated gabbro with assays of 0.66% Ni, 0.90% Cu, 0.09%
Co, 68 ppb Pt, 227 ppb Pd and 46 ppb Au.
MANITOBA NICKEL PROPERTIES:
SOUTH BAY: Exploration was spurred at the South Bay property by the September,
2003 discovery of a zone of high-grade nickel mineralization. The
nickel-copper-cobalt platinum group element ("PGE") zone was found in one wall
of a new road cut 60 km east of the town of Leaf Rapids, Manitoba. The average
grade of eleven samples of near-solid sulphide collected from boulder-sized
blast rubble in the road cut exposure is 2.42 % Ni, 0.78 % Cu, 697 ppm Co and
1.32 g/t PGE. The mineralization is sedimentary-rock-hosted and exhibits similar
metal characteristics to ores associated with magma-derived nickel deposits that
are mined at Thompson and worldwide. Airborne geophysical surveys (VTEM) have
been flown over the property and preliminary soil geochemical surveys have been
undertaken.
THOMPSON NORTH: The property overlies the world class Thompson Nickel Belt
("TNB") where Vale Inco continues to mine nickel-copper-cobalt and platinum
group element mineralization hosted within sedimentary and mafic intrusive
rocks. Based on research by the Manitoba Geological Survey the northeastern
extension of the TNB has been traced through the Thompson North property making
the area highly attractive for repetitions of TNB mineralization. Airborne
geophysics (VTEM) has been flown over the property and numerous anomalous
magnetic and electromagnetic features identified. Follow-up exploration will be
based upon ranking and modeling of geophysics and soil geochemical surveys.
10
CEDAR LAKE: The property occupies the southern portion of the Thompson Nickel
Belt where previous exploration based on the drill-testing of geophysical
anomalies has identified key stratigraphic components that host producing
nickel-copper-cobalt and platinum group elements at the Thompson and Pipe Mines
of Vale Inco. Nickel mineralization has been intersected in drilling on adjacent
Mineral Exploration Licenses. The prospective rock units are overlain by younger
carbonate rocks and conceal the TNB in this area. The Company has undertaken
airborne geophysical surveys (VTEM) and delineated numerous conductive and
magnetic anomalies. These anomalies will be prioritized and drill tested
subsequent to soil geochemical surveys.
All technical information in this Form 20-F has been reviewed by Dr. Mark
Fedikow, PGeo, the qualified person for Widescope under National Instrument
43-101.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN (SEE ALSO
"SELECTED FINANCIAL DATA"). THE CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN
PREPARED IN ACCORDANCE WITH CANADIAN GAAP. REFER TO NOTE 11 TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR A DESCRIPTION OF TRANSACTIONS THAT WERE SUBJECT TO
MATERIAL MEASUREMENT DIFFERENCES BETWEEN CANADIAN GAAP AND U.S. GAAP UNDER ITEM
17.
OVERVIEW
With the acquisition of PFG effective June 30, 2006, the Company's primary focus
shifted to mineral resource exploration operations rather than acquisitions. The
Company charged PFG a modest management fee to offset its reciprocal efforts to
coordinate PFG's affairs until control of PFG was acquired. In 2006 PFG was
charged $9,000 in management fees. This management function has been largely
carried out by the directors and large shareholders, at their own expense. The
Company's management team, affiliates and directors have special expertise in
the areas of operations, due diligence, financial analysis and corporate finance
strategy with respect to emerging growth enterprises. Additionally, the Company
retains Dockside Capital Group to provide certain management functions and in so
doing can also access its similar expertise.
From time-to-time the Company is approached, through referral, to provide these
services on a consulting basis. Thus the Company has generated some revenue by
providing these services. As these sources of revenue are not core to the
Company's focus, the services are not actively marketed. No consulting revenue
was earned in 2006, 2007, 2008, or 2009; although $20,000 was earned in 2004.
A. OPERATING RESULTS
Historically, the Company has shown modest losses for the past several years.
These losses result largely from having little or no revenue and minimal
operating expenses, rather than having significant operating and overhead
expenses. In 2004 the Company elected to sell its passive investment, and this
resulted in a loss that was somewhat greater than usual. Prior to the completion
of the PFG acquisition, the expenses of the Company were almost completely
related to satisfying regulatory requirements, including the annual meeting,
financial reporting, communications with shareholders; and seeking and
evaluating acquisition prospects for suitability and ability to attract
financing.
With the June 30, 2006 completion of the PFG acquisition the Company's expenses
became more heavily weighted in favor of the exploration work and analysis being
carried out on those properties. The Company will continue in the exploration
business via the April 2010 agreements to acquire rights to the Post Creek, Bell
11
Lake, Woods Creek and Halcyon properties in the Sudbury, Ontario nickel belt;
and the agreement to acquire 100% ownership of the high-grade Ni-Cu-PGE South
Bay property near Thompson and the large grassroots Thompson North and Cedar
Lake properties, which are part of the Thompson Nickel Belt.
As a result of initiatives that were announced on April 6, 2010, activities will
shift from the Bissett area and precious metals, to base metals in and around
Sudbury Ontario, and Thompson Manitoba.
BUSINESS OVERVIEW
With the April 2010 entry into base metal exploration North American Nickel is
effectively a new company with its first focus on its two key Sudbury
properties. The Post Creek property is strategically located adjacent to the
producing Podolsky copper-nickel-platinum group metal deposit of FNX Mining. The
property lies along the extension of the Whistle Offset dike structure, which is
a major geological control for Ni-Cu-PGM mineralization. The Bell Lake property
is a 256-acre property that covers approximately one kilometre of the Mystery
Offset dike or MOD. The MOD is interpreted to be an extension of the Worthington
Offset dike which is a 10- to 11-kilometre-long mineralized structure that
extends from the southwest margin of the Sudbury igneous complex. The Company
also has rights to explore the Woods Creek and Halcyon properties in the Sudbury
area; and has an agreement to acquire 100% ownership to the high-grade Ni-Cu-PGE
South Bay property near Thompson and the large grassroots Thompson North and
Cedar Lake properties, which are part of the world-class Thompson Nickel Belt in
Manitoba.
The Company has entered into an agreement with an independent entity to sell
Outback Capital Inc., and its remaining interest in this property. This was done
in order to prepare for the shift in focus from precious metals to base metals.
FLUCTUATIONS IN RESULTS
The Company's annual operating results fluctuate, but very little. Revenues at
this point are solely derived from consulting activities which are not core to
the Company's focus and will fluctuate greatly based upon the Company's receipt
of infrequent, third-party referrals for these services. There is no revenue
from operations. Expenses fluctuate on the basis of costs for exploration and
related activities, and the ever increasing administrative and other costs of
complying with the various regulatory requirements of a public company. We
expect that these regulatory related expenses will continue to increase due to
the upward pressure on professional fees charged to reporting companies,
resulting from changes to securities legislation throughout North America.
With the April 2010 entry into the arena of base metal exploration the Company
expects to report significant additional expenses in the future related to the
exploration activities undertaken in the Sudbury area of Ontario and the
Thompson Nickel Belt in Manitoba. Following the expected sale of Outback Capital
Inc., the Company will have no further expenses related to exploration in the
Bissett area.
B. LIQUIDITY AND CAPITAL RESOURCES
Since the Company is organized in Canada, the Company's December 31, 2009
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles.
As at December 31, 2009, the Company had accumulated losses totaling $13,781,986
and a working capital deficit of $102,535. The continuation of the Company is
12
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, 2009 the Company had cash of $16,515 and a working capital
deficit of $102,535.
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. Only precious metals
seem to have continuing and possibly increasing demand.
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, 2009.
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
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.
13
A. DIRECTORS AND SENIOR MANAGEMENT.
Name, Municipality of Principal Occupation and
Residence and Position Position During the
with the Corporation Age Past Five Years
-------------------- --- ---------------
Douglas E. Ford (1) 46 Director since September 10, 1992;
West Vancouver, B.C. General Manager of Dockside Capital, a
Director private merchant banking and venture
capital firm, from 1986 to present.
Richard J. Mark 60 CEO & Chairman of VMS Ventures Inc. from
North Vancouver, BC 2002 - present, CEO & Chairman of
Chairman & Chief Executive Harvest Gold Corporation from 2005 -
Officer present President & CEO of
Pancontinental Uranium Corp.(formerly
Centram Exploration Ltd.) from 2007 -
present.
John Roozendaal 42 President of VMS Ventures Inc. from 1996
Brandon, MB - present President of Harvest Gold
Director Corporation from 2005 - present
Mark Fedikow 57 President of Mount Morgan Resources Inc.
Winnipeg, MB year - present Director and VP of
President & Director Exploration and Technical Services for
VMS Ventures Inc. 2008 - present
65 President of Search Minerals Inc. from
James Clucas June 2009 - present; Chairman of
North Vancouver, BC International Nickel Ventures Corp. from
Director August 2009 until March 2009; President
& CEO of International Nickel Ventures
Corp. from February 2007 until July
2007; President of International Nickel
Ventures Corp. from September 2003,
until November 2005.
Edward D. Ford (1) 74 Director since March 20, 1990; also has
Whistler, B.C. devoted a portion of his time to
Chief Financial Officer investment activities and as President
& Director of Dockside Capital, a private merchant
banking and venture capital firm, for
more than the last five years; chartered
accountant for more than 40 years.
----------
(1) Edward Ford is the father of Douglas Ford.
B. COMPENSATION.
Management compensation is determined by the board of directors based on
competitive prices for services provided. During the year ended December 31,
2009, directors and officers, including private companies controlled by
directors and officers, as a group, were paid a total of $24,000 in management
fees and rent. 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, 2009, the Company paid no 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.
14
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 one committee, the Audit Committee, made-up of Messrs. Edward
Ford, James Clucas and Douglas Ford. The Audit Committee meets with the auditors
annually prior to completion of the audited financial statements and regularly
with management during the fiscal year. On May 2, 2006, the Company's board of
directors adopted a new charter for the Audit Committee.
D. EMPLOYEES.
Effective at December 31, 2009 the Company had no 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. None were allocated at December 31,
2009. 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, 2009 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,
2009 there were 5,441,726 common shares issued and outstanding. Each of the
listed persons may be reached at the Company's head offices.
15
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class
------------------- -------------------- -----
Principal Holders
Not applicable
Officers and Directors
Edward Ford 2,246,500 (1) 41.3%
Douglas Ford 457,000 (2) 8.4%
Richard J. Mark 0
John Roozendaal 0
Mark Fedikow 0
James Clucas 0
All Officers and Directors
as a Group (6 persons) 2,703,500 49.7%
----------
(1) Includes 741,500 shares held directly; and 215,000 shares held through
Singer Associates Holdings Ltd.; and 215,000 shares held through Arizona
Outdoor Specialists Inc.; and 215,000 shares held through BWN Oil
Technologies Inc.; and 215,000 shares held through Dockside Capital Group
Inc.; and 215,000 shares held through Good Times Enterprises Inc.; and
215,000 shares held through Specialty Holdings Inc.; and 215,000 shares
held through Wheels `n Gear Inc.
(2) Includes 242,000 shares held directly; and 215,000 shares held through Wink
Holdings Ltd.
The Company has arranged two non-brokered private placements of common shares.
The first will consist of 10,000,000 post-consolidation shares at $0.05. The
second will consist of 10,000,000 post-consolidation units at $0.06. Each unit
consists of one post consolidation share and one non-transferrable warrant to
purchase an additional post-consolidation common share at $0.10 for 30 months
after closing. The warrants may be subject to earlier expiry. Both private
placements are expected to close prior to May 15, 2010. The closings of the
private placements when combined with the share issuances required to complete
the acquisition of the Ontario and Manitoba nickel properties will result in new
share positions being created that could have an influence on the direction of
the Company. The Company knows of no other arrangements which may at a
subsequent date result in a change in control of the Company.
B. RELATED PARTY TRANSACTIONS.
During the fiscal year ended December 31, 2009, directors, officers and
companies controlled by them have been engaged in the following transactions
with the Company:
During the year ended December 31, 2009, a company in which a director has an
interest charged the Company $24,000 (2008: $24,000, 2007: $24,000) for rent and
management fees. The unpaid portion of these amounts, plus additional advances
and other amounts due to directors, aggregating (2009: $143,723, 2008: $118,657)
is included in accounts payable and accrued liabilities at December 31, 2009.
The above transactions were made on terms as favorable as or more favorable to
the Company than those that could be obtained from unaffiliated third parties.
16
C. INTERESTS OF EXPERTS AND COUNSEL
Not required
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
See Item 17 and our consolidated 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, 2009 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". The table below sets forth certain
information regarding the price history of our common shares. Note this trading
data does not take into effect the 2-old for 1-new reverse split effected on
April 20, 2010.
Period High (USD) Low (USD)
------ ---------- ---------
Fiscal year ended December 31, 2007 $0.30 $0.05
Fiscal year ended December 31, 2008 $0.16 $0.06
Fiscal year ended December 31, 2009 $0.25 $0.02
Quarter ended December 31, 2008 $0.06 $0.06
Quarter ended March 31, 2009 $0.06 $0.01
Quarter ended June 30, 2009 $0.02 $0.02
Quarter ended September 30, 2009 $0.02 $0.02
Quarter ended December 31, 2009 $0.25 $0.02
Quarter ended March 31, 2010 $0.05 $0.03
Month ended October 31, 2009 $0.02 $0.02
Month ended November 30, 2009 (1) $0.02 $0.02
Month ended December 31, 2009 $0.25 $0.02
Month ended January 31, 2010 $0.05 $0.05
Month ended February 28, 2010 (1) $0.05 $0.05
Month ended March 31, 2010 $0.03 $0.03
Month ended April 30, 2010 (2) $0.24 $0.03
----------
(1) No recorded trades
(2) Through April 23, 2010
17
ITEM 10. ADDITIONAL INFORMATION
A. SHARE CAPITAL
Not required
C. 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 Recources Inc., effective July 12, 2006. The name was
subsequemtly 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.
D. MATERIAL CONTRACTS
The Company entered into a subscription agreement to invest $200,000 into
Outback Capital Inc. dba Pinefalls Gold (PFG) a private Alberta Company with
certain directors and principal shareholders in common with the Company. PFG is
an exploration company with mining claims located in the area of Bissett,
Manitoba. The Company will invest $200,000 in exchange for 4 million units at
$0.05 per unit, each unit comprised of one common share and one warrant to
purchase an additional common share at $0.075 for a period of two years. Prior
to exercising the warrants, after making the investment of $200,000 the Company
18
will own approximately 37% of the common shares of PFG. As at December 31, 2005,
the Company had invested $90,000 for 1.8 million units, approximately 17% of the
outstanding common shares of PFG.
In addition the Company entered into an option agreement with one of the
principal shareholders of PFG, a director of the Company, which entitles the
company to acquire a further 3 million common shares of PFG in exchange for one
million common shares of the Company. The option, exercisable at the Company's
discretion until March 31, 2007, was exercised.
Pursuant to the terms of the subscription agreement and the option agreement,
the latter having been exercised, the company owns 65.42% of the common shares
of PFG.
On April 6, 2009 the company entered into an option agreement with respect to
its 14 remaining claims in the Rice Lake area of Manitoba. The option provides
Cougar Minerals Corporation, a corporation traded on the Canadian National Stock
Exchange (CNSX) to acquire 100% of the company's interest in these claims, and
is open for exercise until April 6, 2009. The purchase price is $180,000 with
$35,000 paid as a non- refundable deposit. The deposit was paid as to $10,000
cash and 500,000 of Cougar's common shares at a deemed price of $0.05 per share.
The Company has entered into an agreement with an independent entity that will
result in it divesting of Outback Capital Inc.
On April 6, 2010 the Company announced that it had entered into 4 agreements to
acquire rights to the Post Creek, Bell Lake, Woods Creek and Halcyon properties
in the Sudbury, Ontario nickel belt; and one agreement to acquire 100% ownership
of the high-grade Ni-Cu-PGE South Bay property near Thompson and the large
grassroots Thompson North and Cedar Lake properties, which are part of the
world-class Thompson Nickel Belt.
E. 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.
19
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.
20
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 $400,000,000 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
$400,000,000 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 $35,000,000 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.
F. 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
21
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 #208 - 828 Harbourside Drive, North Vancouver BC
V7P 3R9 Canada, Telephone 604-904-8481.
22
I. SUBSIDIARY INFORMATION
As of June 30, 2006 Outback Capital Inc. dba Pinefalls Gold ("PFG") a private
Alberta corporation become a majority-owned subsidiary of the Company. PFG was
incorporated under the Alberta BUSINESS CORPORATIONS ACT on February 6, 2001.
The Company has entered into an agreement with an independent third party
whereby this party will acquire Outback Capital Inc.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not required
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
Not applicable
ITEM 15. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of management, including our
chief executive officer and the chief financial officer, we conducted an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, as of December 31, 2009. Based on this evaluation, our chief
executive officer and chief financial officer concluded as of December 31, 2009
that our disclosure controls and procedures were effective.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of consolidated financial statements in accordance
with generally accepted accounting principles and includes those policies and
procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of a company's assets,
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of consolidated financial statements in accordance with
generally accepted accounting principles, and that a company's receipts and
expenditures are being made only in accordance with authorizations of a
company's management and directors, and
23
(3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of a company's assets that could
have a material effect on the consolidated financial statements.
Internal control over financial reporting is a process that involves human
diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. Internal control over financial reporting also
can be circumvented by collusion or improper management override. Because of
such limitations, internal control over financial reporting cannot provide
absolute assurance of achieving financial reporting objectives. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies and procedures may
deteriorate.
However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process
safeguards to reduce, though not eliminate, this risk. Management is responsible
for establishing and maintaining adequate internal control over financial
reporting for the company.
Management has used the framework set forth in the report entitled Internal
Control--Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission, known as COSO, to evaluate the
effectiveness of the Company's internal control over financial reporting. Based
on this assessment, management has concluded that our internal control over
financial reporting was effective as of December 31, 2009.
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Our management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only our management's report in this annual report on Form 20-F.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal controls over financial reporting that
occurred during the period covered by this annual report on Form 20-F that have
materially affected, or are reasonably likely to materially affect our internal
controls over financial reporting.
ITEM 16.
A. AUDIT COMMITTEE FINANCIAL EXPERT
The company has as its audit committee financial expert Mr. Edward D. Ford who
is a Canadian Chartered Accountant. He has held this professional qualification
since 1961. During his career Mr. Ford has been an associate, manager and
partner of several Canadian professional accounting firms that specialized in
audit/assurance, taxation, insolvency and independent business consulting.
Additionally he has served as a Chief Financial Officer of several public
companies.
B. CODE OF ETHICS
The Company has adopted a code of ethics applicable to its directors, principal
executive officer, principal financial officer, principal accounting procedures,
and persons performing similar functions. A copy of the Company's Code of Ethics
24
will be made available to anyone who requests it in writing from the Company's
head office.
D. PRINCIPAL ACCOUNTING FEES AND SERVICES
(A) AUDIT FEES
Dale Matheson Carr-Hilton LaBonte, Chartered Accountants ("DMCL") billed the
Corporation $17,000 - $19,000 (estimated) for audit fees in the year ended
December 31, 2009; $12,000 in 2008, $14,500 in 2007; $13,000 in 2006; $9,000 in
2005; and $6,200 in 2004. The former auditor, Charlton & Company, Chartered
Accountants billed $2,675 in 2004.
(B) AUDIT RELATED FEES
DMCL billed the Company $nil for audit related services in the year ended
December 31, 2009; $nil in 2008; $1,000 in 2007; $nil in 2006, $nil in 2005 and
$nil in 2004. The former auditor, Charlton & Company, Chartered Accountants
billed $nil in 2004.
(C) TAX FEES
DMCL did not provide the Corporation with any professional services rendered for
tax compliance, tax advice and tax planning in the years ended December 31,
2009, 2008, 2007, 2006 and 2005. The former auditor, Charlton & Company,
Chartered Accountants billed $nil in 2004.
(D) ALL OTHER FEES
DMCL did not bill the Corporation for any other products and services in the
years ended December 31, 2008, 2007, 2006, 2005 and 2004. The former auditor,
Charlton & Company, Chartered Accountants billed $nil in 2004.
(E) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
To ensure continuing auditor objectivity and to safeguard the independence of
our auditors, our audit committee has determined a framework for the type and
authorization of non-audit services which our auditors may provide. The audit
committee has adopted policies for the pre-approval of specific services that
may be provided by our auditors. The dual objectives of these policies are to
ensure that we benefit in a cost effective manner from the cumulative knowledge
and experience of our auditors, while also ensuring that the auditors maintain
the necessary degree of independence and objectivity.
Our audit committee approved the engagement of Dale Matheson Carr-Hilton LaBonte
to render audit and non-audit services before they were engaged by us.
D. EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not Applicable
E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not Applicable
25
ITEM 17. FINANCIAL STATEMENTS
The financial statements and notes thereto as required by Item 17 are attached
hereto and found immediately after the text of this Registration Statement. The
auditors' report of Dale Matheson Carr-Hilton LaBonte LLP, independent
registered public accountants, on the audited consolidated financial statements
and notes thereto is included immediately preceding the audited consolidated
financial statements.
Auditors' Report.
Consolidated balance sheets as at December 31, 2009 and 2008.
Consolidated statements of operations and deficit for the years ended
December 31, 2009, 2008 and 2007.
Consolidated statements of cash flows for the years ended December 31,
2009, 2008 and 2007.
Notes to the consolidated financial statements.
ITEM 18. FINANCIAL STATEMENTS
Not applicable. See "Item 17. Financial Statements" above.
ITEM 19. EXHIBITS
Attached hereto are the following exhibits:
10.1 Property Option Agreement - Post Creek
10.2 Property Option Agreement - Bell Lake
10.3 Property Option Agreement - Halcyon
10.4 Property Option Agreement - Woods Creek
10.5 Agreement of Purchase and Sale - Manitoba Properties
10.6 Stock Purchase Agreement - Sale of Outback
12.1 Certification of Chief Executive Officer pursuant to s.302 of the
Sarbanes-Oxley Act of 2002
12.2 Certification of Chief Financial Officer pursuant to s.302 of the
Sarbanes-Oxley Act of 2002
13.1 Certification of Chief Executive Officer pursuant to s.906 of the
Sarbanes-Oxley Act of 2002
13.2 Certification of Chief Financial Officer pursuant to s.906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.
NORTH AMERICAN NICKEL INC
(formerly Widescope Resources Inc.)
Date: April, 27 2010
By: /s/ Douglas E. Ford
---------------------------------------
Name: Douglas E. Ford
Title: Director
as duly authorized signatory
26
[LETTERHEAD OF DALE MATHESON CARR-HILTON LABONTE LLP CHARTERED ACCOUNTANTS]
INDEPENDENT AUDITORS' REPORT
To the Shareholders of North American Nickel Inc.
(formerly Widescope Resources Inc.)
We have audited the consolidated balance sheets of North American Nickel Inc.
(formerly Widescope Resources Inc.) as at December 31, 2009 and 2008 and the
consolidated statements of operations and comprehensive loss, deficit and
accumulated other comprehensive income and cash flows for the years ended
December 31, 2009, 2008 and 2007. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing
standards and with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2009
and 2008 and the results of its operations and its cash flows for the years
ended December 31, 2009, 2008 and 2007 in accordance with Canadian generally
accepted accounting principles.
/s/ DMCL
DALE MATHESON CARR-HILTON LABONTE LLP
Chartered Accountants
Vancouver, Canada
April 23, 2010
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA
-UNITED STATES REPORTING DIFFERENCES
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the Company's ability to continue as a going concern, such as those described in
Note 1 to the financial statements. Our report to the shareholders dated April
23, 2010 is expressed in accordance with Canadian reporting standards which do
not permit a reference to such events and conditions in the auditors' report
when these are adequately disclosed in the financial statements.
/s/ DMCL
DALE MATHESON CARR-HILTON LABONTE LLP
Chartered Accountants
Vancouver, Canada
April 23, 2010
F-1
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Consolidated Balance Sheets
--------------------------------------------------------------------------------
December 31,
2009 2008
------------ ------------
ASSETS
Current assets
Cash $ 16,515 $ 40,661
Receivables 4,197 4,877
Marketable securities (Note 3) 62,500 --
------------ ------------
83,212 45,538
Mineral properties and deferred exploration costs (Note 4) 101,000 205,000
Equipment, net of amortization (Note 5) -- 774
------------ ------------
$ 184,212 $ 251,312
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities (Note 6) $ 185,747 $ 152,996
------------ ------------
Non-controlling interest (Note 4) 53,249 59,980
------------ ------------
Shareholders' equity (deficit)
Share capital - preferred (Note 7) 604,724 604,724
Share capital - common (Note 7) 13,044,609 13,044,609
Contributed surplus 53,344 53,344
Accumulated other comprehensive income 24,525 --
Deficit (13,781,986) (13,664,341)
------------ ------------
(54,784) 38,336
------------ ------------
$ 184,212 $ 251,312
============ ============
Nature and Continuance of Operations (Note 1)
Subsequent Events (Note 12)
Approved by the Board:
"Richard J. Mark"
----------------------------------
Richard J. Mark
"Edward D. Ford"
----------------------------------
Edward D. Ford
The accompanying notes are an integral part of
these consolidated financial statements.
F-2
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Consolidated Statements of Operations and Comprehensive Loss
--------------------------------------------------------------------------------
Years Ended December 31,
2009 2008 2007
----------- ----------- -----------
Expenses
General and administrative $ 57,635 $ 64,138 $ 58,440
Mineral property and deferred exploration costs
- impairment (Note 4) 79,000 145,445 --
----------- ----------- -----------
Loss before other item 136.635 209,583 58,440
Other item:
Write-off of equipment (Note 5) 716 -- --
----------- ----------- -----------
Loss from operations (137,351) (209,583) (58,440)
Non-controlling interest (Note 4) 19,706 8,606 8,681
----------- ----------- -----------
Net loss $ (117,645) $ (200,977) $ (49,759)
----------- ----------- -----------
Basic and diluted loss per common share $ (0.02) $ (0.04) $ (0.01)
Weighted average number of common shares
outstanding - basic and diluted 5,441,726 5,441,726 5,441,726
=========== =========== ===========
Comprehensive loss
Net loss $ (117,645) $ (200,977) $ (49,759)
Unrealized gain on marketable securities 24,525 -- --
----------- ----------- -----------
Comprehensive loss $ (93,120) $ (200,977) $ (49,759)
=========== =========== ===========
The accompanying notes are an integral part of
these consolidated financial statements.
F-3
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Consolidated Statements of Deficit and Accumulated Other Comprehensive Income
--------------------------------------------------------------------------------
Years ended December 31,
2009 2008 2007
------------ ------------ ------------
Deficit
Deficit, beginning of year $(13,664,341) $(13,463,364) $(13,413,605)
Net loss (117,645) (200,977) (49,759)
------------ ------------ ------------
Deficit, end of year $(13,781,986) $(13,664,341) $(13,463,364)
============ ============ ============
Accumulated other comprehensive income
Balance, beginning of year $ -- $ -- $ --
Unrealized gain on marketable securities 24,525 -- --
------------ ------------ ------------
Balance, end of year $ 24,525 $ -- $ --
============ ============ ============
The accompanying notes are an integral part of
these consolidated financial statements.
F-4
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------
Years Ended December 31,
2009 2008 2007
--------- --------- ---------
Operating Activities
Net loss for the year $(117,645) $(200,977) $ (49,759)
Non cash Items:
Non-controlling interest (19,706) (8,606) (8,681)
Mineral property and deferred exploration impairment 79,000 145,445 --
Amortization 58 331 474
Write-off of equipment 716 -- --
Net change in working capital items:
Receivables 680 (1,271) (82)
Accounts payable and accrued liabilities 32,751 42,601 32,969
--------- --------- ---------
Cash used in operations (24,146) (22,477) (25,079)
--------- --------- ---------
Investing Activities
Mineral property exploration costs, net -- (6,490) (10,797)
--------- --------- ---------
Cash used in investing activities -- (6,490) (10,797)
--------- --------- ---------
Net decrease in cash (24,146) (28,967) (35,876)
Cash, beginning of year 40,661 69,628 105,504
--------- --------- ---------
---------
Cash, end of year $ 16,515 $ 40,661 $ 69,628
========= ========= =========
Supplemental Cash Flow Information:
Cash paid for interest $ -- $ -- $ --
--------- --------- ---------
Cash paid for income taxes $ -- $ -- $ --
--------- --------- ---------
The accompanying notes are an integral part of
these consolidated financial statements.
F-5
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
1. Nature and Continuance of Operations
North American Nickel Inc. (formerly Widescope Resources 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 (Note 12). The Company's principal business activity is the
exploration of natural resource properties. During the year ended December
31, 2009, the Company entered into an agreement to option out certain of its
mineral claims and allowed certain other mineral claims to lapse (Note 4).
The Company is currently seeking opportunities to acquire other mineral
properties or enter into additional mineral property option agreements.
Effective April 19, 2010, the Company also consolidated its share capital on
a 2:1 basis, whereby each two old shares are equal to one new share and
increased its authorized capital from 100,000,000 common shares without par
value to an unlimited number of common shares without par value (Note 12).
All references to common shares, stock options, warrants and weighted
average number of shares outstanding in these consolidated financial
statements reflect the share consolidation unless otherwise noted.
The Company is ultimately dependent upon the discovery of economically
recoverable reserves and future production. Currently, the Company will need
additional financing to continue the acquisition, exploration and
development of its properties. The recoverability of the carrying value of
mineral property assets will be dependent upon future production or proceeds
from the disposition. The financial statements have been prepared under the
assumption the Company is a going concern. 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. As a result, additional losses are anticipated prior
to obtaining a level of profitable operations. The Company has a working
capital deficit of $102,535 at December 31, 2009 (2008 - $107,458) and has
accumulated a deficit of $13,781,986 (2008 - $13,664,341).
Management is aware that the Company's future capital requirements will
depend on many factors, including costs of exploration and development of
the properties, production, if warranted, and competition and global market
conditions. The Company's potential recurring operating losses and growing
working capital needs may require that it obtain additional capital to
operate its business. Management's plan includes continuing to pursue
additional sources of financing through the sale of additional common shares
and reducing overhead costs. As a result of the implementation of this plan,
management expects that the Company will have sufficient capital to fund
operations and keep its mineral properties in good standing for the upcoming
fiscal year. However, there can be no assurance that capital will be
available as necessary to meet these continuing exploration and development
costs or, if the capital is available, that it will be on terms acceptable
to the Company. The issuances of additional equity securities by the Company
may result in a significant dilution in the equity interests of current
shareholders. Further discussion of liquidity risk has been disclosed in
Notes 9 and 10.
2. Significant Accounting Policies
Basis of presentation
These financial statements have been prepared in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP"). Except as
indicated in Note 11, they also comply, in all material respects, with
United States generally accepted accounting principles ("US GAAP").
Basis of consolidation
These financial statements have been prepared on a consolidated basis and
include the accounts of the Company and its 65.42% owned subsidiary, Outback
Capital Inc. dba Pinefalls Gold ("PFG"). All intercompany balances and
transactions have been eliminated on consolidation.
F-6
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
2. Significant Accounting Policies cont'd
Estimates, assumptions and measurement uncertainty
The preparation of financial statements in conformity with Canadian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates. By their nature, these estimates are
subject to measurement uncertainty and the effect on the financial
statements of changes in such estimates in future periods could be
significant. Areas requiring significant use of estimates by management
relate to going concern assessments, determining the carrying value of
mineral properties, determining the fair values of marketable securities,
asset retirement obligations and financial instruments and tax rates used to
calculate future income tax balances.
Equipment
Equipment is recorded at cost. Amortization is calculated using the
following annual rate, which is estimated to match the useful lives of the
asset:
Computer hardware 30% declining balance
Mineral properties and deferred exploration costs
The cost of mineral properties and related exploration costs are deferred
until the properties are placed into production, sold, abandoned or until
management has determined that an impairment has occurred. Carrying costs
will be amortized over the useful life of the properties following the
commencement of commercial production, or written off if the properties are
sold abandoned, allowed to lapse, or if management has otherwise determined
that the carrying value of a property is not recoverable and should be
impaired. Properties acquired under option agreements, whereby payments are
made at the sole discretion of the Company, are recorded in the accounts at
such time as the payments are made. It is reasonably possible that
economically recoverable reserves may not be discovered, and accordingly a
material portion of the carrying value of mineral properties and related
deferred exploration costs could be written off. Although the Company has
taken steps to verify title to mineral properties in which it has an
interest, according to the common industry standards for the stage of
exploration of such properties, these procedures do not guarantee the
Company's title. Such properties may be subject to prior agreements or
transfers and title may be affected by undetected title defects.
The amounts shown for mineral properties and deferred exploration costs
represent costs incurred to date, net of impairments, and do not necessarily
represent present or future values which are entirely dependent upon
economic production or recovery from disposal.
Asset retirement obligations
The Company follows the provisions of the Canadian Institute of Chartered
Accountants ("CICA") Handbook Section 3110, "Asset Retirement Obligations",
which requires the estimated fair value of any asset retirement obligations
to be recognized as a liability in the period in which the related
environmental or retirement liability can be reasonably established and
measured. The present value of the associated future costs when measureable
is recorded as a liability and added to the cost of the related property and
amortized over the estimated remaining life. As of December 31, 2009 and
2008 the Company has not incurred and is not aware of any significant asset
retirement obligations in respect of its mineral exploration properties.
F-7
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
2. Significant Accounting Policies cont'd
Impairment of long-lived assets
The Company follows the recommendations of the CICA Handbook Section 3063,
"Impairment of Long-Lived Assets". Section 3063 establishes standards for
recognizing, measuring and disclosing impairment of long-lived assets held
for use. The Company conducts its impairment test on long-lived assets when
events or changes in circumstances indicate that the carrying amount may not
be recoverable. Impairment is recognized when the carrying amount of an
asset to be held and used exceeds the undiscounted future net cash flows
expected from its use and disposal. If there is impairment, the impairment
amount is measured as the amount by which the carrying amount of the asset
exceeds its fair value, calculated using expected discounted cash flows when
independent or quoted market prices are not available.
Financial instruments
The Company adopted the CICA Handbook Sections 3855, "Financial Instruments
- Recognition and Measurement"; Section 3856, "Hedges"; Section 3862,
"Financial Instruments - Disclosures" and Section 3863 "Financial
Instruments Presentation". Section 3855 prescribes when a financial
instrument is to be recognized on the balance sheet and at what amount.
Under Section 3855, financial instruments must be classified into one of
five categories: held-for-trading, held-to-maturity, loans and receivables,
available-for-sale financial assets, or other financial liabilities. All
financial instruments, including derivatives, are measured at the balance
sheet date at fair value except for loans and receivables, held-to-maturity
investments, and other financial liabilities which are measured at amortized
cost. Section 3862 and Section 3863 replace Section 3861, "Disclosure and
Presentation" and revise and enhance disclosure requirements while carrying
forward presentation requirements. The Company's financial instruments
consist of cash, receivables, marketable securities, and accounts payable.
Cash is measured at face value, representing fair value and classified is
held for trading. Receivables are measured at amortized cost and classified
as loans and receivables. Marketable securities are classified as
available-for-sale and measured at fair value at each reporting period with
fair value being determined by quoted market price of the securities.
Unrealized gains and losses from available-for-sale instruments are
recognized in other comprehensive income (loss) during the period. Accounts
payable are measured at amortized cost and classified as other financial
liabilities.
Unless otherwise noted, it is management's opinion that the Company is not
exposed to significant interest, currency or credit risks arising from these
financial instruments. The fair value of these financial instruments
approximates their carrying values unless otherwise noted.
The Company has determined that it does not have derivatives or embedded
derivatives.
The Company does not use any hedging instruments.
Comprehensive income (loss)
Effective January 1, 2007, the Company adopted the CICA Handbook Section
1530, "Comprehensive Income". Comprehensive income (loss) is defined as the
change in equity from transactions and other events from non-owner sources.
Section 1530 establishes standards for reporting and presenting certain
gains and losses not normally included in net income or loss, such as
unrealized gains and losses related to available for sale securities and
gains and losses resulting from the translation of self-sustaining foreign
operations, in a statement of comprehensive income (loss).
For all periods presented through December 31, 2008, the Company has no
items required to be reported in comprehensive loss. During the current
year, the Company recognized in comprehensive income for the period, its
proportionate share of an unrealized gain on marketable securities.
F-8
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
2. Significant Accounting Policies cont'd
Loss per share
The loss per share figures are calculated using the weighted average number
of shares outstanding during the respective fiscal years on a
post-consolidation basis. The calculation of loss per share figures using
the treasury stock method considers the potential exercise of outstanding
share purchase options and warrants or other contingent issuances to the
extent each option, warrant or contingent issuance was dilutive. For all
years presented, diluted loss per share is equal to basic loss per share as
the potential effects of options, warrants and conversions are
anti-dilutive.
Income taxes
The Company accounts for income taxes using the asset and liability method,
whereby future tax assets and liabilities are recognized for the future
income tax consequences attributable to differences between the carrying
values of the asset and liabilities and their respective income tax bases.
Future income tax assets and liabilities are measured using substantively
enacted income tax rates expected to apply to taxable income in the years in
which temporary differences are expected to be recovered or settled. The
effect on future income taxes and liabilities of a change in rates is
included in operations in the period that includes the substantive enactment
date. Where the probability of a realization of a future income tax asset is
more likely than not, a valuation allowance is recorded.
Stock-based compensation
The Company follows the CICA Handbook Section 3870, "Stock-based
Compensation and Other Stock-based Payments," which recommends the fair
value method of valuing all grants of stock options. The estimated fair
value of the stock options is recorded as compensation expense over the
vesting period or at the date of grant if the options vest immediately, with
the offset recorded in contributed surplus. The fair value of options
granted is estimated at the date of grant using the Black-Scholes option
pricing model incorporating assumptions regarding risk-free interest rates,
dividend yield, volatility factor of the expected market price of the
Company's stock, and a weighted average expected life of the options. Any
consideration paid on the exercise of stock options is credited to share
capital.
Accounting changes
CICA Handbook Section 1506, "Accounting Changes," establishes criteria for
changes in accounting policies, accounting treatment and disclosure
regarding changes in accounting policies, estimates and corrections of
errors. In particular, this section allows for voluntary changes in
accounting policies only when they result in the financial statements
providing reliable and more relevant information. This section requires
changes in accounting policies to be applied retrospectively unless doing so
is impracticable.
Capital disclosure
CICA Handbook Section 1535 "Capital Disclosure", specifies the disclosure of
(i) an entity's objectives, policies and processes for managing capital;
(ii) quantitative data about what the entity regards as a capital; (iii)
whether the entity has not complied with any capital requirements; and (iv)
if it has not complied, the consequences of such noncompliance. The Company
has included disclosures recommended by this section in Note 9 to these
financial statements.
General standards for financial statement presentation
In June 2007, the CICA modified section 1400 "General Standards of Financial
Statement Presentation" in order to require that management make an
assessment of the Company's ability to continue as going concern over a
period which is at least, but not limited to, twelve months from the balance
sheet date. The Company has included this required disclosure in Note 1 to
these financial statements.
F-9
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
2. Significant Accounting Policies cont'd
Credit risk and the fair value of financial assets and financial liabilities
In January 2009, the CICA approved EIC 173, "Credit Risk and the Fair Value
of Financial Assets and Liabilities". This guidance clarified that an
entity's own credit risk and the credit risk of the counterparty should be
taken into account in determining the fair value of financial assets and
financial liabilities including derivative instruments. The implementation
of the recommendations of this section has not had a material impact on the
Company's financial statements.
Mining exploration costs
In March 2009 the CICA approved EIC 174, "Mining Exploration Costs". The
guidance clarified that an enterprise that has initially capitalized
exploration costs has an obligation in the current and subsequent accounting
periods to test such costs for recoverability whenever events or changes in
circumstances indicate that its carrying amount may not be recoverable. The
implementation of the recommendations of this new section has not had a
material impact on the Company's financial statements.
Recent accounting pronouncements
International Financial Reporting Standards ("IFRS")
In 2006, the Canadian Accounting Standards Board ("AcSB") published a new
strategic plan that will significantly affect financial reporting
requirements for Canadian companies. The AcSB strategic plan outlines the
convergence of Canadian generally accepted accounting principles with IFRS
over an expected five year transitional period. In February 2008, the AcSB
announced that 2011 is the changeover date for publicly-listed companies to
use IFRS, replacing Canada's own generally accepted accounting principles.
The date is for interim and annual financial statements relating to fiscal
years beginning on or after January 1, 2011. The transition date of January
1, 2011 will require the restatement for comparative purposes of amounts
reported by the Company for the year ended December 31, 2010. While the
Company has begun assessing the adoption of IFRS for 2011, the financial
reporting impact of the transition to IFRS has not been estimated at this
time.
Consolidated Financial Statements and Non-controlling Interests
In January 2009, the CICA issued Section 1601, "Consolidated Financial
Statements", and Section 1602, "Noncontrolling Interests", which together
replace the existing Section 1600, "Consolidated Financial Statements", and
provide the Canadian equivalent to International Accounting Standard 27,
"Consolidated and Separate Financial Statements (January 2008)". The new
sections will be applicable to the Company on January 1, 2011. Section 1601
establishes standards for the preparation of consolidated financial
statements, and Section 1602 establishes standards for accounting for a
non-controlling interest in a subsidiary in consolidated financial
statements subsequent to a business combination. The Company is assessing
the impact, if any, of the adoption of these new sections on its
consolidated financial statements.
Other accounting pronouncements issued by the CICA with future effective
dates are either not applicable or are not expected to be significant to the
financial statements of the Company.
3. Marketable Securities
As at December 31, 2009, PFG held 500,000 shares of Cougar Minerals Corp.
("Cougar"), a company listed on the TSX Venture Exchange (Note 4). At
initial recognition, each share was recorded at a fair value of $0.05. As at
December 31, 2009 the closing price of Cougar's shares was $0.125 per share
with a total fair value of $62,500. The Company classifies the investment as
available-for-sale. The Company's portion of the unrealized gain on the
shares of Cougar was recorded in other comprehensive income and the
remaining portion is included in the balance of non-controlling interest as
at December 31, 2009.
F-10
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
4. Mineral Properties
(a) Pinefalls Gold Property
In April 2005, the Company entered into a subscription agreement to invest
into PFG, a private Alberta exploration company with mining claims
comprising the Pinefalls Gold Property, located in the Bissett area of
Manitoba. Pursuant to the completion of the subscription agreement and a
share exchange agreement, the Company acquired the net assets of PFG
including an interest the Pinefalls Gold Property valued at $319,306. The
Company holds a 65.42% interest in PFG, effective June 30, 2006.
During the year ended December 31, 2009, certain mineral claims comprising
the Pinefalls Gold Property were allowed to lapse, and mineral rights to
those claims reverted to the Province of Manitoba.
On April 6, 2009 PFG entered into an Option and Purchase and Sale Agreement
(the "Agreement") with Cougar whereby Cougar was granted an option to
purchase the remaining claims comprising the Pinefalls Gold Property for the
following consideration:
- $10,000 in cash (received) and 500,000 common shares (received; fair
value of $25,000) upon execution of the Agreement;
- an additional $25,000 before April 30, 2010;
- an additional $50,000 before April 30, 2011;
- an additional $70,000 before April 30, 2012.
During the year ended December 31, 2009, the Company incurred $Nil (2008 -
$6,490) in deferred exploration costs and recorded $79,000 (2008 - $145,445)
in impairment provisions on the Pinefalls Gold Property. The basis of the
impairment was to reflect the net estimated recoverable value of the
Pinefalls Gold Property, based on anticipated future cash flows.
The Pinefalls Gold Property is subject to a 2% royalty based on the gross
cash proceeds received from the sale of minerals, less the cost of smelting,
refining, freight, insurance and other related costs, and the cost of
marketing and sale of minerals derived. The royalty will be calculated on a
cumulative basis and will be payable in cash by the Company within 180 days
of each fiscal year end of the Company.
(b) Post Creek and Woods Creek Property
On December 23, 2009 the Company executed a letter of intent whereby the
Company would have an option to acquire two groups of mineral claims, known
as the Post Creek Property and Woods Creek Property, located within the
Sudbury Mining District of Ontario. The Company paid a non-refundable
deposit of $7,500 and $2,500, respectively, and the terms of an agreement
are to be finalized in April 2010.
F-11
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
4. Mineral Properties cont'd
(c) Mineral properties summary
Title to mining properties involves certain inherent risks due to the
difficulties of determining the validity of certain claims, as well as the
potential for problems arising from the frequently ambiguous conveyance
history characteristic of many mining properties. The Company has
investigated title to all of its mineral properties and, to the best of its
knowledge, title to all of its properties are in good standing.
The following expenditures have been incurred on the Company's mineral
properties and on deferred exploration:
Pinefalls Gold Post Creek Woods Creek
Property Property Property Total
-------- -------- -------- -----
Balance as at December 31, 2007 $ 343,955 $ -- $ -- $ 343,955
Geological consulting fees 6,490 -- -- 6,490
--------- --------- --------- ---------
350,445 -- -- 350,445
Impairment provision (145,445) -- -- (145,445)
--------- --------- --------- ---------
Balance as at December 31, 2008 205,000 -- -- 205,000
Option proceeds received (35,000) -- -- (35,000)
Option payment -- 7,500 2,500 10,000
--------- --------- --------- ---------
170,000 7,500 2,500 180,000
Impairment provision (79,000) -- -- (79,000)
--------- --------- --------- ---------
Balance as at December 31, 2009 $ 91,000 $ 7,500 $ 2,500 $ 101,000
========= ========= ========= =========
5. Equipment
December 31, 2009 December 31, 2008
------------------------------------------ --------------------------------
Net Net
Accumulated Book Accumulated Book
Cost Amortization Disposal Value Cost Amortization Value
---- ------------ -------- ----- ---- ------------ -----
Computer hardware $ 1,579 $ 863 (716) $ -- $ 1,579 $ 805 $ 774
======= ===== ==== ===== ======= ===== =====
6. Related Party Transactions
During the year ended December 31, 2009, a company in which a director has
an interest charged the Company $24,000 (2008: $24,000, 2007: $24,000) for
rent and management fees. The unpaid portion of these amounts, plus
additional advances and other amounts due to directors, aggregating $143,723
(2008: $118,657) is included in accounts payable and accrued liabilities at
December 31, 2009.
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.
F-12
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
7. Share Capital
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 each two
(2) old shares being equal to one (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. All
references to common shares, stock options, warrants and weighted average
number of shares outstanding in these financial statements reflect the share
consolidation unless otherwise noted. The net effect of the above was to
reduce the existing outstanding common shares from 10,883,452 to 5,441,726.
a) 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. 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; 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.
b) Common shares issued and outstanding
2009 2008
------------------------- -------------------------
Shares $ Shares $
--------- ---------- --------- ----------
Balance, beginning and end of year 5,441,726 13,044,609 5,441,726 13,044,609
========= ========== ========= ==========
c) Preferred shares issued and outstanding
2009 2008
------------------------- -------------------------
Shares $ Shares $
--------- ---------- --------- ----------
Balance, beginning and end of year 604,724 604,724 604,724 604,724
d) Warrants
2009 2008
-------- --------
Balance, beginning of year -- 780,166
Expired during the year -- (780,166)
-------- --------
Balance, end of year -- --
======== ========
Each warrant gave the holder the right to purchase one common share of the
Company at $0.36 per share on or before the expiry of the warrants on
December 5, 2008.
e) Stock Options
As of December 31, 2009 and 2008, there were no stock options outstanding.
F-13
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
8. Income Taxes
A reconciliation of income taxes at statutory rates with the reported taxes
is as follows:
2009 2008 2007
--------- --------- ---------
Loss before income taxes: $ 117,645 $ 200,977 $ 49,759
--------- --------- ---------
Statutory rates 31.00% 31.00% 34.12%
Expected income tax recovery 36,470 62,303 16,978
Non-controlling interest 3,389 2,668 2,962
Effect of reduction in tax rates (4,227) (25,427) --
Permanent differences and other (4,100) 14,307 (2,962)
Expiring losses (10,932) (7,194) --
Increase in valuation allowance (20,600) (46,657) (16,978)
--------- --------- ---------
Net future income tax recovery $ -- $ -- $ --
========= ========= =========
The significant components of the Company's future income tax assets are as
follows:
2009 2008
--------- ---------
Future income tax assets:
Non-capital loss carry forward benefit $ 92,000 $ 89,500
Capital losses carried forward 2,000 2,100
Mining properties 56,000 37,800
Valuation allowance (150,000) (129,400)
--------- ---------
Net future income tax asset $ -- $ --
========= =========
The Company has approximately $366,000 in non-capital losses that can be
offset against taxable income in future years which began expiring at
various dates commencing in 2009, and approximately $8,000 in capital losses
which may be available to offset future taxable capital gains which can be
carried forward indefinitely. The potential future tax benefit of these
losses has not been recorded as a full-future tax asset valuation allowance
has been provided due to the uncertainty regarding the realization of these
losses.
The related potential income tax benefits with respect to these items have
not been recorded in the accounts. Application and expiration of these
carryforward balances are subject to relevant provisions of the Income Tax
Act, Canada.
9. Capital Management
The Company manages its capital structure and makes adjustments to it, based
on the funds available to the Company, in order to support the acquisition,
exploration and development of mineral properties. The Board of Directors
does not establish quantitative return on capital criteria for management,
but rather relies on the expertise of the Company's management to sustain
future development of the business.
The 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 pay
for administrative costs, the Company will spend its existing cash and raise
additional amounts as needed. The Company will continue to assess new
properties and seek to acquire an interest in additional properties if it
F-14
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
9. Capital Management cont'd
feels there is sufficient geologic or economic potential and if it has
adequate financial resources to do so.
Management reviews its capital management approach on an ongoing basis and
believes that this approach, given the relative size of the Company, is
reasonable.
There were no changes in the Company's approach to capital management during
the years ended December 31, 2009 and 2008. The Company is not exposed to
externally imposed capital requirements.
10. Risk Factors
The Company is engaged primarily in the mineral exploration field and
manages related industry risk issues directly. The Company is potentially at
risk for environmental reclamation and fluctuations in commodity based
market prices associated with resource property interests. Management is of
the opinion that the Company addresses environmental risk and compliance in
accordance with industry standards and specific project environmental
requirements. There is no certainty that all environmental risks and
contingencies have been addressed.
The Company's risk exposures and the impact on the Company's financial
instruments are summarized below:
Credit risk
The Company's credit risk is primarily attributable to receivables. The
Company has no significant concentration of credit risk arising from
operations. Receivables include primarily goods and services tax due from
the Federal Government of Canada. Management believes that the credit risk
concentration with respect to its receivables is remote.
Liquidity risk
The Company's approach to managing liquidity risk is to ensure that it will
have sufficient liquidity to meet third party liabilities when due. As at
December 31, 2009, the Company had a working capital deficit of $102,535
(2008: $107,458). All of the Company's financial liabilities have
contractual maturities of less than 30 days and are subject to normal trade
terms. The Company is dependent on management's ability to raise additional
funds so that it can manage its financial obligations.
Market risk
(a) Interest rate risk
The Company has cash balances and no interest-bearing debt therefore,
interest rate risk is minimal.
(b) Foreign currency risk
The Company's functional currency is the Canadian dollar and major purchases
are transacted in Canadian dollars: therefore, foreign currency risk is
minimal.
11. Reconciliation between Canadian and United States Generally Accepted
Accounting Principles
These consolidated financial statements have been prepared in accordance
with Canadian GAAP, which differs in certain respects from United States
generally accepted accounting principles ("US GAAP"). A description of US
GAAP and practices prescribed by the US Securities and Exchange Commission
("SEC") that result in material measurement and disclosure differences from
Canadian GAAP are summarized as follows:
F-15
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
11. Reconciliation between Canadian and United States Generally Accepted
Accounting Principles cont'd
Consolidated Balance Sheets
December 31, December 31,
2009 2008
--------- ---------
Total assets under Canadian GAAP $ 184,212 $ 251,312
(a) Mineral property exploration and acquisition
costs expensed under US GAAP (101,000) (205,000)
--------- ---------
Total assets under US GAAP $ 83,212 $ 46,312
========= =========
Total liabilities under Canadian and US GAAP $ 185,747 $ 152,996
========= =========
Non-controlling interest under Canadian GAAP $ 53,249 $ 59,980
(a) Non-controlling interest in mineral property
exploration and acquisition costs expensed
under US GAAP (31,486) (53,614)
--------- ---------
Non-controlling interest under US GAAP $ 21,763 $ 6,366
========= =========
Total shareholders' equity (deficit)
under Canadian GAAP $ (54,784) $ 38,336
(a) Mineral property exploration and acquisition
costs expensed under US GAAP (101,000) (205,000)
(a) Non-controlling interest in mineral property
exploration and acquisition costs expensed
under US GAAP 31,486 53,614
--------- ---------
Total shareholders' equity (deficit) under US GAAP $(124,298) $(113,050)
========= =========
F-16
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
11. Reconciliation between Canadian and United States Generally Accepted
Accounting Principles cont'd
Consolidated Statements of Operations and Deficit
Year ended Year ended Year ended
December 31, December 31, December 31,
2009 2008 2007
--------- --------- ---------
Net loss under Canadian GAAP $(117,645) $(200,977) $ (49,759)
(a) Mineral property exploration and acquisition costs
expensed under US GAAP 69,000 138,955 (10,797)
(b) Mineral property option proceeds included in income
under US GAAP 35,000 -- --
(a) Non-controlling interest in mineral property
exploration and acquisition costs expensed under US GAAP (22,128) 2,246 3,736
--------- --------- ---------
Net loss under US GAAP (35,773) (59,776) (56,820)
Accumulated other comprehensive income 24,525 -- --
--------- --------- ---------
Comprehensive loss - US GAAP $ (11,248) $ (59,776) $ (56,820)
========= ========= =========
Basic and diluted loss per share under US GAAP $ (0.02) $ (0.02) $ (0.01)
========= ========= =========
Consolidated Statements of Cash Flows
Year ended Year ended Year ended
December 31, December 31, December 31,
2009 2008 2007
--------- --------- ---------
Net cash used in operating activities under
Canadian GAAP $ (24,146) $ (22,477) $ (25,079)
(b) Mineral property acquisition and exploration costs
incurred (10,000) (6,490) (10,797)
(b) Mineral property option proceeds received in cash 10,000 -- --
--------- --------- ---------
Net cash used in operating activities under US GAAP $ (24,146) $ (28,967) $ (35,876)
========= ========= =========
Net cash provided by (used in) investing activities
under Canadian GAAP $ -- $ (6,490) $ (10,797)
(b) Mineral property acquisition and exploration costs
incurred -- 6,490 10,797
--------- --------- ---------
Net cash provided by (used in) investing activities under
US GAAP $ -- $ -- $ --
========= ========= =========
Net cash provided by financing activities under Canadian and
US GAAP $ -- $ -- $ --
========= ========= =========
F-17
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
11. Reconciliation between Canadian and United States Generally Accepted
Accounting Principles cont'd
(a) Interest in unproven mineral properties
In accordance with Canadian GAAP, the cost of mineral properties and
related exploration and development costs are deferred until the
properties are placed into production, sold, abandoned or management
has determined there to be impairment.
In accordance with US GAAP, mineral property acquisition costs are
initially capitalized when incurred and the carrying value of
intangible assets and other long-lived assets is reviewed on a regular
basis for the existence of facts or circumstances that may suggest
impairment. The Company recognizes impairment when the sum of the
expected undiscounted future cash flows is less than the carrying
amount of the asset. Mineral property exploration costs are expensed as
incurred until commercially minable deposits are determined to exist
within a particular property as cash flows cannot be reasonably
estimated prior to such determination.
Accordingly, for all periods presented, the Company has expensed all
mineral property exploration costs for US GAAP purposes and impaired
the property acquisition costs incurred during the period (see Note 4).
During 2009, the Company optioned some of its mineral property
interest. Under Canadian GAAP, the Company will record the option
proceeds against the carrying value of the mineral property while for
US GAAP, the Company will record the option proceeds as a recovery of
mineral property costs on the statement of operations.
(b) Mineral property costs incurred
Under Canadian GAAP, cash flows relating to mineral property
acquisition and exploration costs and option proceeds received are
reported as investing activities. Under US GAAP, these amounts are
classified as operating activities. The net cash provided by (used in)
operating and investing activities has been adjusted accordingly for
all periods presented.
(c) Income taxes
Under US GAAP, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date. Under Canadian GAAP, the effect of a change in tax
rates is recognized in the period of substantive enactment. The
application of this difference under US GAAP does not result in a
material difference between future income taxes as recorded under
Canadian GAAP.
(d) Stock-based compensation
The Company has granted stock options to certain directors, employees
and consultants. Under Canadian GAAP, prior to 2003, no compensation
expense was recorded in connection with the granting of stock options.
Under previous US GAAP, the Company accounted for stock-based
compensation in respect of stock options granted to directors and
employees using the intrinsic value based method. Stock options granted
to non-employees were accounted for by applying the fair value method
using the Black-Scholes option pricing model. Commencing January 1,
2003, under Canadian GAAP the Company expenses the fair value of all
stock options granted. As a result, effective January 1, 2003, there is
no material difference between the Company's accounting for stock
options under US GAAP versus Canadian GAAP.
F-18
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
11. Reconciliation between Canadian and United States Generally Accepted
Accounting Principles cont'd
(e) Reporting comprehensive income
The Company follows the standards for the reporting and presentation of
comprehensive income and its components in a full set of general
purpose financial statements. Comprehensive income equals net income
for the year as adjusted for all other non-owner changes in
shareholders' equity. The Company recognizes all items under accounting
standards as components of comprehensive income to be reported in a
financial statement. Effective January 1, 2007, the Company adopted new
Canadian GAAP accounting standards issued by the CICA relating to
comprehensive income. The new standard has been adopted on a
prospective basis with no restatement to prior period financial
statements. The new standard substantially harmonizes Canadian GAAP
with US GAAP with respect to reporting comprehensive income and loss.
During the year, other comprehensive loss recognized is $24,525 (2008 -
$Nil, 2007 -$Nil).
(f) Recent accounting pronouncements
In May 2009, the Financial Accounting Standards Board ("FASB") issued
guidance that establishes general standards of accounting for and
disclosure of events that occur subsequent to the balance sheet date
but before financial statements are issued. The statement defines two
types of subsequent events (1) recognized subsequent events, which
provide additional evidence about conditions that existed at the
balance sheet date, and (2) non-recognized subsequent events, which
provide evidence about conditions that did not exist at the balance
sheet date, but arose before the financial statements were issued.
Recognized subsequent events are required to be recognized in the
financial statements, and non-recognized subsequent events are required
to be disclosed. The adoption had no material impact on the Company's
financial position, results of operations or cash flows.
In June 2009, the FASB issued the Accounting Standards Codification
(the "Codification"), which establishes a sole source of US
authoritative GAAP. The Codification is meant to simplify user access
to all authoritative accounting guidance by reorganizing US GAAP
pronouncements into approximately ninety accounting topics within a
consistent structure; its purpose is not to create new accounting and
reporting guidance. The adoption of this guidance did not have an
effect on the Company's consolidated results of operations, financial
position or cash flows.
Other pronouncements issued by the FASB or other authoritative
accounting standards groups with future effective dates are either not
applicable or are not expected to be significant to the consolidated
financial statements of the Company.
12. Subsequent Events
The Company has evaluated subsequent events through the date of filing, and
the following events have been identified:
(a) Effective April 5, 2010 the Company entered into 4 option agreements
to acquire rights to four groups of mineral claims, known as the Post
Creek, Bell Lake, Woods Creek and Halcyon properties, located within
the Sudbury Mining District of Ontario. In order to acquire 100%
working interests in the properties, subject to certain net smelter
return royalties ("NSR") and advance royalty payments, the Company
agreed to pay cash instalments, issue common shares and incur
exploration expenses as follows:
F-19
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
12. Subsequent Events cont'd
Post-consolidation Exploration
Commitment Cash shares expense
Property date payment issued incurred
-------- ---- ------- ------ --------
Post Creek
April 2010 $ 12,500 400,000 N/A
April 2011 $ 30,000 300,000 $ 15,000
April 2012 $ 50,000 300,000 $ 15,000
April 2013 $ 50,000 N/A $ 15,000
--------- --------- ---------
Totals $ 142,500 1,000,000 $ 45,000
========= ========= =========
Bell Lake
April 2010 $ 25,000 300,000 N/A
April 2011 $ 25,000 300,000 N/A
April 2012 $ 40,000 400,000 N/A
April 2013 $ 40,000 N/A N/A
April 2014 $ 80,000 N/A N/A
--------- --------- ---------
Totals $ 210,000 1,000,000 N/A
========= ========= =========
Halcyon
April 2010 $ 15,000 300,000 N/A
April 2011 $ 25,000 200,000 $ 22,000
April 2012 $ 35,000 200,000 $ 22,000
April 2013 $ 35,000 N/A $ 22,000
--------- --------- ---------
Totals $ 110,000 700,000 $ 66,000
========= ========= =========
Woods Creek
April 2010 $ 7,500 150,000 N/A
April 2011 $ 15,000 150,000 $ 24,000
April 2012 $ 20,000 N/A $ 24,000
April 2013 $ 45,000 N/A $ 24,000
--------- --------- ---------
Totals $ 87,500 300,000 $ 72,000
========= ========= =========
(b) Effective April 5, 2010 the Company entered into a Purchase and Sale
Agreement to acquire ownership of the South Bay, Thompson North and
Cedar Lake properties in Manitoba, subject to a 2% NSR reserved by the
vendor, in exchange for a $1,000 cash payment and 6,000,000
post-consolidation common shares valued at $0.06 per share. The
agreement is subject to certain conditions precedent and is scheduled
to close on or before August 3, 2010.
(c) Effective April 19, 2010 the name of the Company was changed from
Widescope Resources Inc. to North American Nickel Inc. and the
Company's shareholders approved a special resolution to reorganize the
Company's capital structure by way of a consolidation, in a reverse
stock split, of the existing common shares on the basis of each 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.
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NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
December 31, 2009
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12. Subsequent Events cont'd
(d) The Company's shareholders ratified the adoption of a new stock option
plan (the "2010 Stock Option Plan") for insiders, employees and other
service providers to the Company. Under the 2010 Stock Option Plan the
Company will reserve up to 10% of the issued common shares from time
to time on a rolling basis. Under the new plan the Company has
reserved up to 3,000,000 post-consolidation common shares for issuance
at $0.10 per share for option grants to officers, directors, employees
and consultants of the Company.
(e) The Company has arranged two non-brokered private placements. The
first will consist of 10,000,000 post-consolidation shares at $0.05.
The second will consist of 10,000,000 post-consolidation units at
$0.06. Each unit consists of one post consolidation share and one
non-transferrable warrant to purchase an additional post-consolidation
common share at $0.10 for 30 months after closing. The warrants may be
subject to earlier expiry. Both private placements are expected to
close prior to May 15, 2010.
(f) Effective April 7, 2010 the Company has entered into a Stock Purchase
Agreement whereby it has agreed to sell its entire interest in Outback
to an arms length party for cash consideration equivalent to the
calculated book value of the Company's holding at the date of closing,
which is expected to be on or before May 10, 2010.
F-21