Exhibit 99.1
UNAUDITED CONDENSED INTERIM Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2022
(Stated in Canadian dollars, unless otherwise indicated)
INDEX
Unaudited Condensed Interim Consolidated Financial Statements
| ■ | Condensed Interim Consolidated Statements of Financial Position | |
| ■ | Condensed Interim Consolidated Statements of Comprehensive Loss | |
| ■ | Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity (Deficiency) | |
| ■ | Condensed Interim Consolidated Statements of Cash Flows | |
| ■ | Notes to the Condensed Interim Consolidated Financial Statements |
Notice to reader of the unaudited CONDENSED interim CONSOLIDATED financial statements
For the Three and Nine Months Ended September 30, 2022
In accordance with National Instrument 51-102 – Continuous Disclosure Obligations, of the Canadian Securities Administrators, Premium Nickel Resources Ltd. (the “Company” or “PNRL”) discloses that the Financial Statements (as defined herein) have not been reviewed or audited by independent auditors.
The unaudited condensed interim consolidated financial statements of the Company for the three and nine months ended September 30, 2022 (“Financial Statements”) have been prepared by management. The Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company for the fiscal year ended December 31, 2021, which are included in the Form 3D2 (Information Required in a Filing Statement for a Reverse Takeover or Change of Business) (the “Filing Statement”) prepared in accordance with the policies of the TSX Venture Exchange. A copy of the Filing Statement is available electronically on SEDAR (www.sedar.com) under Premium Nickel Resources Ltd.’s issuer profile. The Financial Statements are stated in Canadian dollars, unless otherwise indicated, and are prepared in accordance with International Financial Reporting Standards (“IFRS”).
| 2 | PNRL / Q3 2022 |
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian dollars, unaudited)
| Notes | As at September 30, 2022 | As at December 31, 2021 | ||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS | ||||||||||
| Cash | ||||||||||
| Prepaid expenses | ||||||||||
| Other receivables | 5 | |||||||||
| TOTAL CURRENT ASSETS | ||||||||||
| NON-CURRENT ASSETS | ||||||||||
| Exploration and evaluation assets | 6 | |||||||||
| Property, plant and equipment | 7 | |||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||||
| TOTAL ASSETS | ||||||||||
| LIABILITIES | ||||||||||
| CURRENT LIABILITIES | ||||||||||
| Trade payables and accrued liabilities | 8 | |||||||||
| TOTAL CURRENT LIABILITIES | ||||||||||
| NON-CURRENT LIABILITIES | ||||||||||
| Vehicle financing | ||||||||||
| Leave and severance pay provision | ||||||||||
| Financial liability – warrant | 9 (c) | |||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||||
| TOTAL LIABILITIES | ||||||||||
| SHAREHOLDERS’ EQUITY (DEFICIENCY) | ||||||||||
| Share capital – common | 9 | |||||||||
| Share capital – preferred | 9 | |||||||||
| Reserve | ||||||||||
| Deficit | ( | ) | ( | ) | ||||||
| Foreign currency translation reserve | ( | ) | ( | ) | ||||||
| TOTAL SHAREHOLDERS’ EQUITY (DEFICIENCY) | ( | ) | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY) | ||||||||||
Nature of Operations and Going Concern (Note 1)
Subsequent Events (Note 13)
The accompanying notes are an integral part of these Financial Statements.
Approved by the Board of Directors on November 28, 2022
“signed” Keith Morrison Chief Executive Officer |
“signed” John Hick Audit Committee Chair |
| 3 | PNRL / Q3 2022 |
Condensed
Interim Consolidated Statements of Comprehensive Income (Loss)
(Expressed in Canadian dollars, unaudited)
| Three months ended | Nine months ended | |||||||||||||||||
| Notes | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | ||||||||||||||
| EXPENSES | ||||||||||||||||||
| Corporate and administration expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Management fees | 10 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Due diligence BCL | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Advisory and consultancy | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Depreciation | 6 | ( | ) | ( | ) | |||||||||||||
| Interest and bank charges | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Share-based payment | 9 | ( | ) | ( | ) | ( | ) | |||||||||||
| Warrant fair value movement | 9 | |||||||||||||||||
| Net foreign exchange gain (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||
| ( | ) | ( | ) | ( | ) | |||||||||||||
| OTHER ITEMS | ||||||||||||||||||
| Interest income (expenses) and other income | ( | ) | ||||||||||||||||
| Acquisition loss on RTO | 4 | ( | ) | ( | ) | |||||||||||||
| NET PROFIT (LOSS) FOR THE PERIOD | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| OTHER COMPREHENSIVE LOSS | ||||||||||||||||||
| Exchange differences on translation of foreign operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| TOTAL COMPREHENSIVE PROFIT (LOSS) FOR THE PERIOD | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Basic income (loss) per share | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Weighted average number of common shares outstanding - basic | ||||||||||||||||||
| Diluted income (loss) per share | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Weighted average number of common shares outstanding - diluted | ||||||||||||||||||
The accompanying notes are an integral part of these Financial Statements.
| 4 | PNRL / Q3 2022 |
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity (Deficiency)
(Expressed in Canadian dollars, unaudited)
| Notes | Number of Shares | Share Capital | Preferred shares | Reserve | Deficit | Foreign Currency Translation Reserve | Total Shareholders’ Equity (Deficiency) | |||||||||||||||||||||||
| BALANCE AS AT DECEMBER 31, 2020 | 8 | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Share capital issued through private placement | ||||||||||||||||||||||||||||||
| Share issue costs | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Share-based payment | ||||||||||||||||||||||||||||||
| Exchange differences on translation of foreign operations | ( | ) | ( | ) | ||||||||||||||||||||||||||
| BALANCE AS AT SEPTEMBER 30, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| BALANCE AS AT DECEMBER 31, 2021 | 9 | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Share capital issued through private placement | ||||||||||||||||||||||||||||||
| Share issue costs | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Acquisition of NAN | 4 | |||||||||||||||||||||||||||||
| PNR share exchange | ( | ) | ||||||||||||||||||||||||||||
| NAN shares received in exchange of PNR shares | ||||||||||||||||||||||||||||||
| Outstanding shares of NAN acquired in RTO | ||||||||||||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||||||||||||
| FV of exercised warrants | ( | ) | ||||||||||||||||||||||||||||
| Exercise of options | ||||||||||||||||||||||||||||||
| FV of exercised options | ( | ) | ||||||||||||||||||||||||||||
| Share-based payment | ||||||||||||||||||||||||||||||
| Exchange differences on translation of foreign operations | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| BALANCE AS AT SEPTEMBER 30, 2022 | 9 | ( | ) | ( | ) | |||||||||||||||||||||||||
The accompanying notes are an integral part of these Financial Statements.
| 5 | PNRL / Q3 2022 |
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian dollars, unaudited)
| Three months ended | Nine months ended | |||||||||||||||||
| Notes | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | ||||||||||||||
| OPERATING ACTIVITIES | ||||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Items not affecting cash: | ||||||||||||||||||
| Share-based payment | ||||||||||||||||||
| Depreciation | ||||||||||||||||||
| Provision for leave and severance | ||||||||||||||||||
| Warrant fair value movement | ( | ) | ( | ) | ||||||||||||||
| Unrealized foreign exchange loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss on acquisition | 4 | |||||||||||||||||
| Changes in working capital | - | |||||||||||||||||
| Prepaid expenses and other receivables | ( | ) | ( | ) | ( | ) | ||||||||||||
| Trade payables and accrued expenses | ( | ) | ||||||||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| INVESTING ACTIVITIES | ||||||||||||||||||
| Property, plant and equipment | ( | ) | ( | ) | ||||||||||||||
| Expenditures on exploration and evaluation assets | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| RTO transaction | 4 | |||||||||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||||||||
| FINANCING ACTIVITIES | ||||||||||||||||||
| Proceeds from issuance of common shares | ( | ) | ||||||||||||||||
| Direct financing costs | ( | ) | ( | ) | ( | ) | ||||||||||||
| Proceeds from exercise of warrants and options | ||||||||||||||||||
| Net cash provided by financing activities | ||||||||||||||||||
| Change in cash for the period | ||||||||||||||||||
| Cash at the beginning of the period | ||||||||||||||||||
| Cash at the end of the period | ||||||||||||||||||
The accompanying notes are an integral part of these Financial Statements.
| 6 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
Premium Nickel Resources Ltd. (TSXV: PNRL) (formerly, North American Nickel Inc.) is the continuing company after giving effect to the reverse takeover transaction (the “RTO”) of the Company (then named North American Nickel Inc. (“NAN”)), whereby Premium Nickel Resources Corporation (“PNRC”), the RTO acquiror, and 1000178269 Ontario Inc., a wholly-owned subsidiary of NAN (“NAN Subco”), amalgamated by way of a triangular amalgamation (the “Amalgamation”) under the Business Corporations Act (Ontario) (the “OBCA”) effective August 3, 2022 (Note 4). Prior to the RTO, the common shares of NAN were listed and posted for trading on the TSX Venture Exchange (the “Exchange”) under the symbol “NAN”. Following the RTO, the common shares of Premium Nickel Resources Ltd., are listed and posted for trading on the Exchange under the symbol “PNRL”.
Prior to the RTO, PNRC was a private company existing under the OBCA to evaluate, acquire, improve and reopen, assuming economic feasibility, a combination of certain assets of BCL Limited (“BCL”) and Tati Nickel Mining Company (“TNMC”) that were in liquidation in Botswana. The initial investors of PNRC include NAN, several resource investors, and local Namibian and Botswanan mine operators.
In connection with the RTO, the Company was continued under the OBCA and changed its name from “North American Nickel Inc.” to “Premium Nickel Resources Ltd.” The following corporate structure chart sets forth details of the direct and indirect ownership of the principal subsidiaries of the Company.
Currently, the Company’s principal business activity is the exploration and development of mineral properties in Botswana through its wholly-owned subsidiaries.
| 7 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
Notes:
| (1) | Premium Nickel Resources Proprietary Limited owns the Selebi Mines (as defined below). | |
| (2) | Premium Nickel Group Proprietary Limited owns the Selkirk mine. |
The Company has its head and registered office at One First Canadian Place, 100 King Street West, Suite 3400, Toronto, Ontario, Canada, M5X 1A4.
PNRC submitted its indicative offer to the BCL and TNMC liquidators in June 2020 to acquire assets of the former-producing BCL Mining Complex and TNMC operations located in north-eastern Botswana. On February 10, 2021, PNRC was selected as the preferred bidder and on March 22, 2021, PNRC entered into a Memorandum of Understanding providing for a six-month exclusivity period to complete additional work and negotiate the asset purchase agreements.
On September 28, 2021, PNRC executed a definitive asset purchase agreement (the “Selebi APA”) with the liquidator of BCL to acquire the Selebi and Selebi North (together, the “Selebi Assets”) nickel-copper-cobalt (“Ni-Cu-Co”) deposits and related infrastructure formerly operated by BCL. On January 31, 2022, PNRC closed the transaction and ownership of the assets was transferred to the Company.
PNRC also negotiated a separate asset purchase agreement to finalize terms for any prioritized assets formerly operated by TNMC. On August 22, 2022, the Company announced the completion of its acquisition of the nickel, copper, cobalt, platinum-group elements (“Ni-Cu-Co-PGE”) Selkirk mine in Botswana, together with associated infrastructure and four surrounding prospecting licenses (“Selkirk Assets”). The acquisition was completed pursuant to the Company’s previously-announced asset purchase agreement with the liquidator of TNMC on January 20, 2022. With the acquisition now complete, ownership of the Selkirk mine has been transferred to the Company.
The Company continues to monitor the global COVID-19 developments and is committed to working with health and safety as a priority and in full respect of all government and local COVID-19 protocol requirements. PNRL has developed COVID-19 travel, living and working protocols and is ensuring integration of those protocols with the currently applicable protocols of the Government of Botswana and surrounding communities.
Going Concern
The
Company, being in the exploration and redevelopment stage, is subject to risks and challenges similar to companies in a comparable stage
of development. These risks include the challenges of securing adequate capital for exploration, development and operational risks inherent
in the mining industry, and global economic and metal price volatility and there is no assurance management will be successful in its
endeavors. As at September 30, 2022, the Company had no source of operating cash flows, nor any credit line currently in place. The Company
incurred a net loss of $
These unaudited condensed interim consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. The ability of the Company to continue operations as a going concern is ultimately dependent upon achieving profitable operations and its ability to obtain adequate financing. 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. It is not possible to predict whether financing efforts will be successful or if the Company will attain a profitable level of operation. These uncertainties cast substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities and the reported expenses and comprehensive loss that might be necessary should the Company be unable to continue as a going concern. These adjustments could be material.
| 8 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
The evaluation properties in which the Company currently has an interest are in pre-revenue exploration stage. As such, the Company is dependent on external financing to fund its activities. In order to carry out the planned due diligence, exploration and cover administrative costs, the Company will use its existing working capital and raise additional amounts as needed. Although the Company has been successful in its past fundraising activities, there is no assurance as to the success of future fundraising efforts or as to the sufficiency of funds raised in the future. The Company will continue to assess new properties and seek to acquire interests in additional properties if there is sufficient geologic or economic potential and if adequate financial resources are available to do so.
The Financial Statements were approved and authorized for issuance by the Board of Directors of the Company on November 28, 2022. The discussion in the notes to the condensed interim consolidated financial statements is stated in Canadian dollars.
| 2. | BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES |
| (a) | Statement of Compliance |
These condensed interim consolidated financial statements were prepared in accordance with International Accounting Standards (“IAS 34”), Interim Financial Reporting, using the accounting policies of the Company outlined in its December 31, 2021 annual consolidated financial statements. The accounting policies are in line with IFRS guidelines. These condensed interim consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and therefore should be read in conjunction with the Company’s annual consolidated financial statements.
| (b) | Basis of Preparation |
These condensed interim consolidated financial statements have been prepared under the historical cost convention, modified by the revaluation of any financial assets and financial liabilities where applicable. The preparation of condensed interim consolidated financial statements in conformity with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the Company’s accounting policies. These areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the condensed interim consolidated financial statements, are disclosed in note 3.
All references to share capital, warrants, options and weighted average number of shares outstanding have been adjusted in these Financial Statements to give effect to the RTO and the Consolidation, as if such alterations occurred at the beginning of the earliest period presented herein.
| (c) | Basis of consolidation |
These Financial Statements are presented on a consolidated basis of the Company and its wholly-owned subsidiaries. All intercompany transactions, balances, income and expenses are eliminated upon consolidation.
Effective
August 3, 2022, NAN acquired
| 9 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
| 3. | CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS |
The preparation of the condensed interim consolidated financial statements in accordance with International Financial Reporting Accounting Standards (“IFRSIAS 34”) requires management to make judgments, estimates and assumptions that can affect reported amounts of assets, liabilities, revenue and expenses and the accompanying disclosures. Estimates and assumptions are continuously evaluated and are based on management’s historical experience and on other assumptions believed to be reasonable under the circumstances. However, different judgments, estimates and assumptions could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The area involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the condensed interim consolidated financial statements is:
Going Concern
Condensed interim consolidated financial statements are prepared on a going concern basis unless management either intends to liquidate the Company or has no realistic alternative to do so. Assessment of the Company’s ability to continue as a going concern requires the consideration of all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period. This information includes estimates of future cash flows and other factors, the outcome of which is uncertain. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast substantial doubt upon the Company’s ability to continue as a going concern those uncertainties are disclosed.
| 4. | AMALGAMATION |
On April 26, 2022, PNRC and NAN entered into a definitive amalgamation agreement (the “Amalgamation Agreement”) in respect of their previously-announced RTO transaction, pursuant to which PNRC would “go-public” by way of a reverse takeover of NAN.
Transaction Particulars
Pursuant to the Amalgamation Agreement:
| (i) | NAN’s subsidiary, NAN Subco, amalgamated with PNRC under Section 174 of the OBCA to form one corporation; | |
| (ii) | Holders of PNRC shares exchanged their shares at a rate of 1.054 shares of NAN for each share of PNRC (the “Exchange Ratio”), after giving effect to the Consolidation; and | |
| (iii) | the transactions resulted in an RTO of the Company under the policies of the Exchange, all in the manner contemplated by, and pursuant to, the terms and conditions of the Amalgamation Agreement. |
In connection with the RTO, NAN has, among other things: (i) changed its name to “Premium Nickel Resources Ltd.”; (ii) changed its stock exchange ticker symbol to “PNRL”; and (iii) reconstituted the board of directors and management of the Company. The outstanding options of PNRC immediately prior to the effective time of the RTO were exchanged and adjusted pursuant to the terms of the Amalgamation Agreement such that holders thereof were entitled to acquire, following the closing of the RTO, options of the Company after giving effect to the Exchange Ratio, as applicable.
Pursuant
to the Amalgamation Agreement, the Company issued common shares of the Company (on a post-Consolidation basis) in exchange
for common shares of PNRC. Immediately after giving effect to the RTO, the Company was owned as to (i) approximately
| 10 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
Before the closing of the RTO, NAN had common shares outstanding (on a post-Consolidation basis). Taking into account the composition of the board and senior management and the relative ownership percentages of NAN and PNRC shareholders in the newly-combined enterprise, PNRC is considered, from an accounting perspective, to have acquired NAN, and hence the RTO transaction has been treated as a “reverse takeover” under IFRS.
For financial reporting purposes, the Company is considered to be a continuation of PNRC, the legal subsidiary, except with regard to the authorized and issued share capital, which is that of NAN, the legal parent. The consolidated statements of operations and cash flows for the quarter ended September 30, 2022 include the results of operations and cash flows of PNRC for the period from January 1, 2022 to August 3, 2022, and the results of operations and cash flows of both PNRC and NAN for the period from August 3, 2022 to September 30, 2022. The primary reason for the business combination was to create a leading international nickel-copper-cobalt mineral exploration company. With a portfolio of nickel-copper cobalt assets, the Company will have the ability to execute a phased strategy and focus in the short term on developing the Selebi Project in Botswana, its material property.
The substance of the transaction is a reverse acquisition of a non-operating company. The transaction does not constitute a business acquisition as the amalgamation does not meet the definition of a business combination under IFRS 3. As a result, the transaction is accounted for as a capital transaction with NAN being identified as the accounting acquiree and the equity consideration being measured at fair value (“FV”).
The
purchase price has been determined based on the number of shares that PNRC would have had to issue on the date of closing to give the
owners of NAN the same percentage equity (
The costs of the acquisition have been allocated as follows:
| NAN’s shares outstanding before RTO | ||||
| NAN share price ($/share) before RTO | $ | |||
| FV of shares transferred | $ | |||
| FV of options, warrants and agent warrants | ||||
| FV of preferred shares | ||||
| Total FV of consideration transferred | $ | |||
| Cash | $ | |||
| Trade and other receivables | ||||
| Property, plant and equipment | ||||
| Exploration and evaluation assets* | ||||
| Trade payables and accrued liabilities | ( | ) | ||
| Net assets acquired | ||||
| Loss on acquisition | ||||
| $ |
| * |
| 11 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
Pursuant
to the RTO, an aggregate of options to purchase common shares of the Company (“Replacement Options”) were
issued (on a post-Consolidation basis) to the former holders of options to purchase common shares of PNRC (prior to the RTO) (“PNRC
Options”) in exchange for PNRC Options. The Replacement Options issued to the former holders of PNRC Options were
on the same terms and conditions as those exchanged by PNRC holders. No amount has been recorded in respect of these actual issuances
of options. Rather, given that the RTO has been accounted for as a reverse takeover of NAN by PNRC, from an accounting perspective, PNRC
is deemed to have issued options and warrants to the former security holders of NAN. On August 3, 2022, NAN had options and
warrants outstanding, respectively, as well as preferred shares that could be converted to common shares of
NAN (on a post-Consolidation basis). The fair value of the deemed issuance of options, warrants and preferred
shares of the Company was $ million, and this amount has been included as a component of the purchase price. Costs related to the transaction
were $
The
trading in common shares of NAN on the Exchange was halted following the announcement of the RTO on February 17, 2022, with the closing
share price on the Exchange on that date being $ per share. The common shares of the Company resumed trading on the Exchange on August
18, 2022, under the symbol “PNRL”. Given that the acquisition was effected by way of a pre-determined share exchange ratio
negotiated in April 2022, the effect of recording the share consideration exchanged using market price for the shares on the last trading
date prior to the transaction resulted in a loss of approximately $
| 5. | OTHER RECEIVABLES |
A summary of the receivables and other current assets as at September 30, 2022 and December 31, 2021 is detailed in the table below:
| September 30, 2022 | December 31, 2021 | |||||||
| HST paid on purchases | ||||||||
| VAT paid on purchases | ||||||||
| Other receivables | ||||||||
| 6. | EXPLORATION AND EVALUATION ASSETS |
| Botswana | Greenland | Canada | ||||||||||||||||||
| Selebi | Selkirk | Maniitsoq | Properties | Total | ||||||||||||||||
| Acquisition | ||||||||||||||||||||
| Balance, December 31, 2021 | ||||||||||||||||||||
| Acquisition costs | ||||||||||||||||||||
| Balance, September 30, 2022 | ||||||||||||||||||||
| Exploration | ||||||||||||||||||||
| Balance, December 31, 2021 | ||||||||||||||||||||
| Site administration | ||||||||||||||||||||
| Care & Maintenance | ||||||||||||||||||||
| Geology | ||||||||||||||||||||
| Drilling | ||||||||||||||||||||
| Geophysics | ||||||||||||||||||||
| Engineering | ||||||||||||||||||||
| ESG | ||||||||||||||||||||
| Health and safety | ||||||||||||||||||||
| Utilities - Electricity | ||||||||||||||||||||
| Balance, September 30, 2022 | ||||||||||||||||||||
| Total, September 30, 2022 | ||||||||||||||||||||
| Total, December 31, 2021 | ||||||||||||||||||||
The following is a description of the Company’s exploration and evaluation assets and the related spending commitments:
| 12 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
Botswana Assets - Selebi and Selkirk
On September 28, 2021, the Company executed the Selebi APA with the BCL liquidator to acquire the Selebi assets and related infrastructure formerly operated by BCL. On January 31, 2022, the Company closed the transaction and ownership of the Selebi Assets transferred to the Company.
PNRC also negotiated a separate asset purchase agreement with the liquidator of TNMC to acquire the Selkirk deposit and related infrastructure formerly operated by TNMC on January 20, 2022 and closed the transaction on August 22, 2022.
Pursuant
to the Selebi APA the aggregate purchase price payable to the seller for the Selebi Assets, shall be the sum of US$
| ● | US$ |
| ● | US$ |
| ● | The
third instalment of $ |
| ● | Payment
of care and maintenance funding contribution in respect of the Selebi Assets for a total
of US$ |
As per the term and conditions of the Selebi APA, the Company has the option to cancel the second and third payments and give back the Selebi Assets to the liquidator in the event where the exploration program determines that the Selebi Assets are not economical. PNRL also has an option to pay in advance the second and third payments in the event where the exploration program determines that the Selebi Assets are economical. The Company’s accounting policy, as permitted by IAS 16 – Property, Plant and Equipment, is to measure and record contingent consideration when the conditions associated with the contingency are met. As of September 30, 2022, none of the conditions of the second and third instalment are met. Hence, these amounts are not accrued in the condensed interim consolidated financial statements.
In addition to the Selebi APA, the purchase of the Selebi Assets is also subject to a contingent compensation agreement as well as a royalty agreement with the liquidator.
In
regard to the Selkirk Assets, the purchase agreement does not provide for a purchase price or initial payment for the purchase of the
assets. The Selkirk purchase agreement provides that if the Company elects to develop Selkirk first, the payment of the second Selebi
instalment of US$
During
the nine months ended September 30, 2022, the Company incurred $
Greenland – Maniitsoq Property
The
Company’s Maniitsoq property in Greenland was owned by NAN prior to the RTO. The Maniitsoq property is subject to a
| 13 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
The Company may terminate the licenses at any time, however any unfulfilled obligations according to the licenses will remain in force, regardless of the termination.
Future required minimum exploration expenditures will be adjusted each year on the basis of the change to the Danish Consumer Price Index.
Prior
to the closing of the RTO on August 3, 2022, the Maniitsoq property had a book value of $
From
August 3, 2022 to September 30, 2022, the Company spent an additional $
The
Sulussugut License (2011/54), which was first granted on August 15, 2011 by the Bureau of Minerals and Petroleum (“BMP”)
of Greenland, has been renewed and valid until December 31, 2022. The Company has available credits of DKK
The
Ininngui License (2012/28) was first granted by BMP on March 4, 2012 and currently in the second license period. During the year ended
December 31, 2021, the Company received a license extension, which provides for a renewal period until December 31, 2023. Total cumulative
surplus credit as at December 31, 2021 was DKK
Carbonatite
License (2018/21) was granted on May 4, 2018 for exclusive exploration rights of an area located near Maniitsoq in West Greenland. The
license is valid for five years until December 31, 2022 and during the year ended December 31, 2021, the Company received a license extension,
which provides for renewal until December 31, 2024. The Company has a total surplus credit of DKK
On February 18, 2020, the Company was granted new prospective license No. 2020/05, by the BMP of Greenland for a period of five years ending December 31, 2024.
Canada – Post Creek, Halcyon and Quetico Property
NAN
acquired the rights to Post Creek, Halcyon and Quetico Property within the Sudbury Mining District of Ontario in 2013, 2015, and 2018,
respectively. The Company is obligated to pay advances on a NSR royalty of $
The
work commitment to hold all 809 claim cells of Quetico was $
During
the period from August 3, 2022 to September 30, 2022, the Company incurred additional $
| 14 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
High Atlas Project in Morocco
In 2018, the Company’s geologists identified a project opportunity in the high Atlas Mountains of Morocco. There is no modern geophysical coverage and no drilling on the property.
In
2019, the Company signed a memorandum of understanding (the “MOU”) with Office National des Hydrocarbons et des Mines
(“ONHYM”), a government entity and the single largest current permit holder in Morocco. Through this alliance, the
Company was given access to confidential exploration data to develop nickel projects in the High Atlas Region of Morocco. In November
and December 2021, the Company lodged applications for five permits in Morocco. In December, four of the five permits were awarded to
the Company. An application for a fifth permit was submitted and awarded in February 2022. Work plans were submitted in May 2022. The
work obligations are approximately $
In October 2022, the Company and ONHYM decided not to pursue the joint venture discussions that initially set out the general framework of a joint venture for the exploration and consolidation of permits owned by ONHYM in the Imilchil area. The Company intends to continue its work on the five permits it acquired in 2021 in the same region.
The exploration and license related expenditures for the project are recorded as property investigation expense in the condensed interim consolidated statements of comprehensive loss. The Company has spent $nil on the project during the period from August 3, 2022 to September 30, 2022.
| 7. | PROPERTY, PLANT AND EQUIPMENT |
The table below sets out costs and accumulated amortization as at September 30, 2022:
| Vehicles | Furniture | Leasehold improvement | Buildings | Exploration Equipment | Computer Equipment and Software | Total | ||||||||||||||||||||||
| Cost | ||||||||||||||||||||||||||||
| Balance – December 31, 2021 | ||||||||||||||||||||||||||||
| Purchases | ||||||||||||||||||||||||||||
| Deemed acquisition from NAN | ||||||||||||||||||||||||||||
| Balance – September 30, 2022 | ||||||||||||||||||||||||||||
Property, Plant and Equipment
Equipment is stated at historical cost less accumulated amortization and accumulated impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of a significant replaced part is derecognized. All other repairs and maintenance are charged to the condensed interim consolidated statements of comprehensive loss during the financial period in which they are incurred. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.
| 15 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
Depreciation and amortization are calculated on a straight-line method to charge the cost, less residual value, of the assets to their residual values over their estimated useful lives. The depreciation and amortization rate applicable to each category of equipment is as follows:
| Equipment | Depreciation rate | |
| Vehicles |
| |
| Furniture |
| |
| Leasehold improvement | |
| 8. | TRADE PAYABLES AND ACCRUED LIABILITIES |
September 30, 2022 | December 31, 2021 | |||||||
| Amounts due to related parties (Note 10) | ||||||||
| Trade payables | ||||||||
| Accrued liabilities | ||||||||
| 9. | SHARE CAPITAL, WARRANTS AND OPTIONS |
The authorized capital of the Company comprises an unlimited number of common shares without par value and Series 1 convertible preferred shares without par value.
| a) | Common Shares Issued and Outstanding |
On August 3, 2022, NAN, NAN Subco and PNRC completed the RTO transaction, whereby shareholders of PNRC exchanged their shares at a rate of common shares of NAN (on a post-Consolidation basis) for each common share of PNRC held immediately prior to the effective time of the RTO (Note 4). The share capital of each company prior to the RTO was as follows:
| Shares Outstanding | Share Capital | |||||||
| North American Nickel Inc. | (post-consolidation basis) | |||||||
| December 31, 2020 | $ | |||||||
| Share capital issued through private placement | ||||||||
| Share issue costs | ( | ) | ||||||
| Value allocated to warrants | ( | ) | ||||||
| Exercised options | ||||||||
| Exercised options fair value | ||||||||
| Exercised warrants | ||||||||
| Exercised warrants fair value | ||||||||
| December 31, 2021 | ||||||||
| Share capital issued through subscription receipt financing | ||||||||
| Share issue costs | ( | ) | ||||||
| Exercised warrants | ||||||||
| Exercised warrants fair value | ||||||||
| Balance as at August 3, 2022 prior to business combination with PNRC | $ | |||||||
| 16 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
| Shares Outstanding | Share Capital | |||||||
| Premium Nickel Resources Corp. | ||||||||
| December 31, 2020 | $ | |||||||
| Share capital issued through private placement | ||||||||
| Share issue costs | ( | ) | ||||||
| December 31, 2021 | ||||||||
| Share capital issued through private placement | ||||||||
| Share issue cost | ( | ) | ||||||
| Balance as at August 3, 2022 prior to business combination with NAN | * | $ | ||||||
| * |
Subsequent to the RTO transaction, the share capital of the Company was as follows:
| Shares Outstanding | Share Capital | |||||||
| Premium Nickel Resources Ltd. (formerly “North American Nickel Inc.”) | ||||||||
| Balance as at August 3, 2022 prior to business combination with PNRC | $ | |||||||
| Decrease in the share capital to that of PNRC upon RTO (Note 4) | ( | ) | ||||||
| Issued pursuant to reverse takeover in exchange for shares of PNRC (Note 4) | ||||||||
| Exercise warrants post-RTO | ||||||||
| Exercised warrants fair value | ||||||||
| Exercise options post-RTO | ||||||||
| Exercised options fair value | ||||||||
| Balance as at September 30, 2022 | $ | |||||||
In
April 2022, PNRC completed a non-brokered private placement of
On August 3, 2022, the date of the RTO, a total of common shares of NAN (on a post-Consolidation basis) were issued in exchange for shares of PNRC. After giving effect to the RTO, the Company had common shares issued and outstanding (on a post-Consolidation basis), based on a total of (i) common shares issued to the former shareholders of PNRC under the RTO, and (ii) common shares held by the shareholders of NAN prior to the closing of the RTO.
Following
the RTO, during the period from August 3, 2022 to September 30, 2022, a total of common shares of the Company were issued upon
the exercise of warrants at prices between $ and $ per warrant for total cash proceeds of $
Following
the RTO, during the period from August 3, 2022 to September 30, 2022, a total of common shares of the Company were issued upon
the exercise of options at prices of $ per option for total cash proceeds of $
| 17 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
As at September 30, 2022, the Company has common shares issued and outstanding (December 31, 2021 – on a post-RTO and post -consolidation basis).
| b) | Preferred shares issued and outstanding |
As at September 30, 2022 and September 30, 2021 there are series 1 preferred shares outstanding (on a post-Consolidation basis).
The rights and restrictions of the preferred shares are as follows:
| i) | dividends shall be paid at the discretion of the directors; | |
| ii) | the holders of the preferred shares are not entitled to vote except at meetings of the holders of the preferred shares, where they are entitled to one vote for each preferred share held; | |
| iii) | the shares are convertible at any time after six months from the date of issuance, upon the holder serving the Company with 10 days written notice; and | |
| iv) | the
number of the common shares to be received on conversion of each preferred share is to be
determined by dividing the conversion value of the share, $ |
| c) | Warrants |
On February 26, 2021, PNRC issued to NAN a non-transferable common share purchase warrant (the “Warrant”), which entitled NAN to purchase common shares of PNRC representing to 15% of the common shares of PNRC issued and outstanding, upon payment of US$million prior to the fifth anniversary of the date of issue.
The
Warrant was classified as a derivative financial liability that should be measured at fair value, with changes in value recorded in profit
or loss. Prior to the RTO, on Jun 30, 2022, the Company reassessed the fair value of the warrant at $
| June 30, 2022 | December 31, 2021 | |||||||
| Expected dividend yield | % | % | ||||||
| Latest private placement price | $ | $ | ||||||
| Expected share price volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Remaining life of warrants | ||||||||
Volatility assumptions for the valuation of the Warrant were derived by reference to the volatility of NAN as the stock price of NAN was highly correlated to the advancement of the BCL assets acquisition following its investment in PNRC.
On April 25, 2022, in connection with and immediately prior to the entry into the Amalgamation Agreement, NAN and PNR entered into the waiver and suspension agreement, pursuant to which NAN agreed that its exercise privileges under the Warrant or any portion thereof to subscribe for additional PNR Shares were suspended until the later of (i) the 61st calendar date following the date on which the Amalgamation Agreement was executed, and (ii) the date on which the Amalgamation Agreement is terminated in accordance with its terms.
Prior to the date that the Amalgamation became effective, the PNR Shares and the Warrant held by NAN were contributed to NAN Subco, as part of the securities contribution, resulting in such securities being cancelled by operation of the triangular amalgamation. The fair value of the Warrant was written off upon the closing of the RTO. PNRC had no other issued and outstanding warrants prior to the RTO
| 18 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
The outstanding warrants of NAN prior to the completion of the RTO were as follows:
| North American Nickel | Number Outstanding (Post-consolidation basis) | Weighted Average Exercise Price ($) | ||||||
| December 31, 2021 | ||||||||
| Issued | ||||||||
| Exercised | ( | ) | ||||||
| Cancelled / expired | ||||||||
| Balance as at August 3, 2022 prior to business combination with PNRC | ||||||||
Subsequent to the RTO, the outstanding warrants of the Company were as follows:
| Premium Nickel Resources Ltd. | Number Outstanding (Post-consolidation basis) | Weighted Average Exercise Price ($) | ||||||
| Balance as at August 3, 2022 prior to business combination with PNRC | ||||||||
| Issued | ||||||||
| Exercised | ( | ) | ||||||
| Cancelled / expired | ( | ) | ||||||
| Balance as at September 30, 2022 | ||||||||
At September 30, 2022, the Company had outstanding common share purchase warrants exercisable to acquire common shares of the Company as follows:
| Warrants Outstanding | Expiry Date | Exercise Price ($) | Weighted Average remaining contractual life (years) | |||||||||
| April 16, 2023 | ||||||||||||
| August 3, 2024 | ||||||||||||
| d) | Stock options |
The
Company adopted a Stock Option Plan (the “Plan”), providing the authority to grant options to purchase commons shares
of the Company to directors, officers, employees and consultants enabling them to acquire up to an aggregate of common shares
of the Company, subject to and in accordance with the terms of the Plan. Under the Plan, the exercise price of each option equals the
offer price of the most recent financing on the date of grant. The options can be granted for a maximum term of
| North American Nickel | Number Outstanding (post-consolidation basis) | Weighted Average Exercise Price ($) | ||||||
| December 31, 2021 | ||||||||
| Cancelled/expired | ( | ) | ||||||
| Balance as at August 3, 2022 prior to business combination with PNRC | ||||||||
| 19 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
| Premium Nickel Resources Corp. | Number Outstanding | Weighted Average Exercise Price ($) | ||||||
| December 31, 2021 | ||||||||
| Issued | ||||||||
| Balance as at August 3, 2022 prior to business combination with NAN | ||||||||
Subsequent to the RTO, the outstanding options of the Company were as follows:
| Premium Nickel Resources Ltd. | Number Outstanding | Weighted Average Exercise Price ($) | ||||||
| Balance as at August 3, 2022 prior to business combination with PNRC | ||||||||
| Issued pursuant to RTO in exchange for options of PNRC | ||||||||
| Balance as at September 30, 2022 | ||||||||
During the nine months ended September 30, 2022, PNRC granted an aggregate total of stock options to employees, directors and consultants with a maximum term of . The options are exercisable at US$ per share (C$/share) with 1/3 vesting on the date of grant, 1/3 on the first anniversary and 1/3 on the second anniversary following the close of the US$ private placement.
Upon the closing of the RTO, all options to purchase common shares of PNRC were exchanged for options to purchase common shares of the Company in accordance with the Exchange Ratio, and vested in-full immediately. The Company calculates the fair value of all stock options using the Black-Scholes Option Pricing Model. The fair value of all options, including those granted during the nine months ended September 30, 2022 as well as the ones granted but not vested during the year ended December 2021, amounted to $ and was recorded as a share-based payment expense. The weighted average fair value of options granted is $ per option.
| September 30, 2022 | December 31, 2021 | |||||||
| Expected dividend yield | % | % | ||||||
| Latest private placement price | $ | $ | ||||||
| Expected share price volatility | % | %- | % | |||||
| Risk free interest rate | % | % - | % | |||||
| Expected life of options | ||||||||
Volatility assumptions for the valuation of options were derived with reference to the volatility of the common shares of NAN, insofar as management believes that the trading price of the common shares of NAN was, prior to the RTO, highly-correlated to the advancement of the BCL assets acquisition following its investment in PNRC.
| 20 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
Options Outstanding | Options Exercisable | Expiry Date | Exercise Price ($) | Weighted average remaining contractual life (years) | ||||||||||||
| February 24, 2025 | ||||||||||||||||
| August 19, 2025 | ||||||||||||||||
| January 26, 2026 | ||||||||||||||||
| February 25, 2026 | ||||||||||||||||
| September 29, 2026 | ||||||||||||||||
| October 25, 2026 | ||||||||||||||||
| January 20, 2027 | ||||||||||||||||
| e) | Reserve |
The reserve records items recognized as stock-based compensation expense and other share-based payments until such time that the stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital. Amounts recorded for forfeited or expired unexercised options and warrants are transferred to deficit.
During
the period ended September 30, 2022, the Company recorded $
| 10. | RELATED PARTY TRANSACTIONS |
The following amounts due to related parties are included in trade payables and accrued liabilities (Note 8).
| September 30, 2022 | December 31, 2021 | |||||||
| Directors and Officers of the Company | ||||||||
| NAN | ||||||||
These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.
| (a) | Related-party transactions |
During
the nine months ended September 30, 2022, ThreeD Capital subscribed for common shares of PNRC (representing common
shares of the Company following the RTO, on a post-Consolidation basis), representing an investment of US$
| Directors and Officers of the Company | ||||
| ThreeD Capital | ||||
| NAN | ||||
| 21 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
On
April 30, 2022, all amounts owing in respect of the above promissory notes were repaid in full by payment of cash in an amount of $
| (b) | Key management personnel is defined as members of the Board of Directors and senior officers. |
Key management compensation was as follows:
| September 30, 2022 | September 30, 2021 | |||||||
| Management fees | ||||||||
| Due diligence BCL | ||||||||
| Corporate and administration expenses | ||||||||
| 11. | FINANCIAL INSTRUMENTS |
The Company thoroughly examines the various financial instrument risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include interest rate risk, credit risk, liquidity risk, and currency risk. The carrying value of the Company’s financial instruments approximates their fair value due to their short-term nature. Fair value measurements of financial instruments are required to be classified using a fair value hierarchy that reflects the significance of inputs in making the measurements. The levels of the fair value hierarchy are defined as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3 – Inputs for the asset or liability that are not based on observable market data.
On September 30, 2022, the fair value of the Company’s warrant liabilities are based on Level 3 measurements and the fair value of cash is based on Level 1 measurements. The fair values of other financial instruments approximate their carrying values due to the relatively short-term maturity of these instruments.
| 12. | RISK MANAGEMENT |
The Company’s exposure to market risk includes, but is not limited to, the following risks:
Interest Rate Risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not subject to significant changes in interest rates.
Foreign Currency Exchange Rate Risk
Currency risk is the risk that the fair value or future cash flows will fluctuate because of changes in foreign currency exchange rates. In addition, the value of cash and other financial assets and liabilities denominated in foreign currencies can fluctuate with changes in currency exchange rates.
The Company operates in Canada and Botswana and undertakes transactions denominated in foreign currencies such as the United States dollar and Botswana Pula, and consequently is exposed to exchange rate risks. Exchange risks are managed by matching levels of foreign currency balances and related obligations and by maintaining operating cash accounts in non-Canadian dollar currencies.
| 22 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The credit risk is primarily associated with liquid financial assets. The Company limits exposure to credit risk on liquid financial assets by holding cash at highly-rated financial institutions.
Price Risk
The Company is exposed to price risk with respect to commodity prices. Commodity price risk is defined as the potential adverse impact on income and economic value due to commodity price movements and volatilities. To mitigate price risk, the Company closely monitors commodity prices of precious metals and the stock market to determine the appropriate course of action to be taken by the Company.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company manages the liquidity risk inherent in these financial obligations by regularly monitoring actual cash flows to annual budget which forecast cash and expected cash availability to meet future obligations.
The Company will defer discretionary expenditures, as required, in order to manage and conserve cash required for current liabilities.
The following table shows the Company’s contractual obligations as at September 30, 2022:
September 30, 2022 | Less than 1 year | 1 - 2 years | 2 - 5 years |
Total | ||||||||||||
| Trade payables and accrued liabilities | ||||||||||||||||
| Vehicle financing | ||||||||||||||||
Capital Risk Management
The Company manages its capital to ensure that it will be able to continue as a going concern, so that adequate funds are available or are scheduled to be raised to meet its ongoing administrative and operating costs and obligations. This is achieved by the Board of Directors’ review and ultimate approval of budgets that are achievable within existing resources, and the timely matching and release of the next stage of expenditures with the resources made available from capital raisings and debt funding from related or other parties. In doing so, the Company may issue new shares, restructure or issue new debt.
The Company is not subject to any externally imposed capital requirements imposed by a regulator or a lending institution.
| 23 | PNRL / Q3 2022 |
Notes to the Unaudited Condensed Interim Consolidated Financial statements
For the Three and Nine Months Ended September 30, 2022
(Expressed in Canadian dollars)
In the management of capital, the Company includes the components of equity deficiency, loans and borrowings, other current liabilities, net of cash.
| September 30, 2022 | December 31, 2021 | |||||||
| Shareholder’s equity (deficiency) | ( | ) | ||||||
| Current liabilities | ||||||||
| ( | ) | |||||||
| Cash | ( | ) | ( | ) | ||||
| ( | ) | |||||||
| 13. | SUBSEQUENT EVENT |
On
November 21, 2022, the Company announced a $
The obligations of the Company under the Promissory Note are fully and unconditionally guaranteed by each of its existing and future subsidiaries. No assets of the Company were pledged as collateral under the Promissory Notes. The Promissory Note is subject to certain covenants and provisions on events of default, repayments and mandatory prepayments that are customary for a loan of this nature. The Company intends to use the proceeds from the issuance of the Promissory Note to fund the ongoing redevelopment work programs on its Botswana assts and for general corporate purpose.
In connection with the Bridge Loan financing, the Company also issued common share purchase warrants to the Lender, each of which is exercisable to acquire one common share of the Company at a price of $per share until November 25, 2023.
| 24 | PNRL / Q3 2022 |