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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 000-14740

PREMIUM NICKEL RESOURCES LTD.

(Exact name of registrant as specified in its charter)

Ontario, Canada |  | N/A
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
Suite 3400, One First Canadian Place, P.O. Box 130, Toronto, Ontario, Canada |  | M5X 1A4
(Address of principal executive offices) |  | (Zip Code)

(604) 770-4334

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
None |  | None |  | None

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☐
Non-accelerated filer | ☒ | Smaller reporting company | ☒
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 19, 2024, there were 185,708,588 Common Shares issued and outstanding.

TABLE OF CONTENTS

Part I | Financial Information | 3
| Cautionary Note Regarding Forward-Looking Statements | 3
| Item 1. Financial Statements | 4
| Unaudited Condensed Interim Consolidated Balance Sheets | 5
| Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss | 6
| Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ (Deficit) Equity | 7
| Unaudited Condensed Interim Consolidated Statements of Cash Flows | 8
| Notes to the Unaudited Condensed Interim Consolidated Financial Statements | 9
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 48
| Item 4. Controls and Procedures | 48
Part II | Other Information | 49
| Item 1. Legal Proceedings | 49
| Item 1A. Risk Factors | 49
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 49
| Item 3. Defaults Upon Senior Securities | 49
| Item 4. Mine Safety Disclosures | 49
| Item 5. Other Information | 49
| Item 6. Exhibits | 50
Exhibit Index | 50
Signature | 51

| 2 |

PART I - FINANCIAL INFORMATION

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) for Premium Nickel Resources Ltd. (the “Company” or “PNRL”) (as defined herein), contains forward-looking statements that relate to future events or our future financial performance. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. These risks and other factors include those listed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”) as filed with the Securities and Exchange Commission on June 28, 2024 and elsewhere in this Report. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. We discuss many of these risks in greater detail under the heading “Risk Factors” of the 2023 Form 10-K. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date hereof. You should read this Report and the documents that we have filed as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless otherwise indicated, all references to “$”,”C$” and “dollars” in this Report refer to Canadian dollars, references to “US$” in this Report refer to United States dollars and references to “BWP” in this Report refer to Botswanan Pula. On June 28, 2024, the daily exchange rate: (i) for one United States dollar expressed in Canadian dollars, as quoted by the Bank of Canada, was US$1.00 = C$1.3687 (or C$1.00 = US$0.7306); (ii) for one Botswanan Pula expressed in Canadian dollars, as quoted by Bloomberg LP, was BWP 1.00 = C$0.1008 (or C$1.00 = BWP 9.9195); and (iii) for one Botswanan Pula expressed in United States dollars, as quoted by Bloomberg LP, was BWP 1.00 = US$0.0737 (or US$1.00 = BWP 13.5685).

| 3 |

Item 1. Financial Statements

UNAUDITED CONDENSED INTERIM Consolidated Financial Statements

For the three and six months ended June 30, 2024 and 2023

In accordance with generally accepted accounting principles in the United States and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission and stated in Canadian dollars, unless otherwise indicated.

INDEX

Unaudited Condensed Interim Consolidated Financial Statements

| ■ | Unaudited Condensed Interim Consolidated Balance Sheets
| ■ | Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss
| ■ | Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
| ■ | Unaudited Condensed Interim Consolidated Statements of Cash Flows
| ■ | Notes to the Unaudited Condensed Interim Consolidated Financial Statements

| 4 |

Unaudited Condensed Interim Consolidated Balance Sheets

(Expressed in Canadian dollars)

|  | Notes |  | As at June 30, 2024 $ |  |  | As at December 31, 2023 $ |
ASSETS |  |  |  |  |  |  |  |  |  |
CURRENT ASSETS |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  |  |  | 28,081,517 |  |  |  | 19,245,628 |
Prepaid expenses |  |  |  |  | 628,643 |  |  |  | 900,310 |
Other receivables |  | 3 |  |  | 939,326 |  |  |  | 532,835 |
Spare parts |  | 18 |  |  | 1,204,446 |  |  |  | 212,135 |
TOTAL CURRENT ASSETS |  |  |  |  | 30,853,932 |  |  |  | 20,890,908 |
NON-CURRENT ASSETS |  |  |  |  |  |  |  |  |  |
Exploration and evaluation assets |  | 4,10 |  |  | 8,699,085 |  |  |  | 8,594,798 |
Property, plant and equipment |  | 5 |  |  | 7,981,157 |  |  |  | 8,488,499 |
TOTAL NON-CURRENT ASSETS |  |  |  |  | 16,680,242 |  |  |  | 17,083,297 |
TOTAL ASSETS |  |  |  |  | 47,534,174 |  |  |  | 37,974,205 |
LIABILITIES |  |  |  |  |  |  |  |  |  |
CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |
Trade payables and accrued liabilities |  | 6 |  |  | 4,273,213 |  |  |  | 4,280,146 |
Lease liabilities |  | 9 |  |  | 1,306,906 |  |  |  | 1,611,143 |
TOTAL CURRENT LIABILITIES |  |  |  |  | 5,580,119 |  |  |  | 5,891,289 |
NON-CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |
Vehicle financing |  |  |  |  | 190,953 |  |  |  | 236,124 |
Provision for leave and severance |  |  |  |  | 770,185 |  |  |  | 510,202 |
Term Loan |  | 7 |  |  | 18,448,467 |  |  |  | 17,956,423 |
DSUs liability |  | 11 |  |  | 1,128,878 |  |  |  | 884,481 |
NSR option liability |  | 10 |  |  | 2,750,000 |  |  |  | 2,750,000 |
TOTAL NON-CURRENT LIABILITIES |  |  |  |  | 23,288,483 |  |  |  | 22,337,230 |
TOTAL LIABILITIES |  |  |  |  | 28,868,602 |  |  |  | 28,228,519 |
SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |
Common shares (No par value, unlimited common shares authorized; 185,708,588 issued and outstanding) (December 31, 2023 – 149,300,920) |  |  |  |  | - |  |  |  | - |
Preferred shares |  |  |  |  | 31,516 |  |  |  | 31,516 |
Additional paid-in capital |  |  |  |  | 143,874,771 |  |  |  | 116,069,973 |
Deficit |  |  |  |  | (123,707,188 | ) |  |  | (104,566,816 | )
Accumulated other comprehensive loss |  |  |  |  | (1,533,527 | ) |  |  | (1,788,987 | )
TOTAL SHAREHOLDERS’ EQUITY |  |  |  |  | 18,665,572 |  |  |  | 9,745,686 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  | 47,534,174 |  |  |  | 37,974,205 |

Nature of Operations and Going Concern (Note 1)

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

Approved by the Board of Directors on August 19, 2024.

“signed” Keith Morrison Director | “signed” Jason LeBlanc Director

| 5 |

Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss

(Expressed in Canadian dollars)

|  |  |  | Three months ended |  |  | Six months ended |
|  | Notes |  | June 30, 2024 $ |  |  | June 30, 2023 $ |  |  | June 30, 2024 $ |  |  | June 30, 2023 $ |
EXPENSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
General and administration expenses |  | 17 |  |  | 2,390,873 |  |  |  | 2,457,373 |  |  |  | 4,342,809 |  |  |  | 4,314,785 |
Depreciation |  | 5 |  |  | 369,674 |  |  |  | 43,998 |  |  |  | 733,902 |  |  |  | 89,760 |
General exploration expenses |  | 4 |  |  | 5,547,764 |  |  |  | 4,906,504 |  |  |  | 11,279,762 |  |  |  | 8,922,345 |
Interest and bank charges |  |  |  |  | 8,340 |  |  |  | 46,798 |  |  |  | 16,274 |  |  |  | 96,737 |
Share-based payment |  | 11 |  |  | 389,612 |  |  |  | - |  |  |  | 779,224 |  |  |  | - |
DSUs granted |  | 11 |  |  | 283,664 |  |  |  | 174,946 |  |  |  | 564,913 |  |  |  | 322,405 |
Fair value movement of DSUs |  | 11 |  |  | (93,914 | ) |  |  | (25,833 | ) |  |  | (320,516 | ) |  |  | (16,000 | )
Net foreign exchange loss |  |  |  |  | 147,989 |  |  |  | 73,487 |  |  |  | 214,002 |  |  |  | 103,903 |
Operating expenses |  |  |  |  | 9,044,002 |  |  |  | 7,677,273 |  |  |  | 17,610,370 |  |  |  | 13,833,935 |
OTHER ITEMS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  |  |  |  | (21,155 | ) |  |  | (3,411 | ) |  |  | (453 | ) |  |  | (13,088 | )
Interest expense on Term Loan |  | 7 |  |  | 770,345 |  |  |  | 11,285 |  |  |  | 1,530,455 |  |  |  | 11,285 |
Interest expense on A&R Promissory Note |  |  |  |  | - |  |  |  | 461,760 |  |  |  | - |  |  |  | 682,547 |
NET LOSS FOR THE PERIOD |  |  |  |  | 9,793,192 |  |  |  | 8,146,907 |  |  |  | 19,140,372 |  |  |  | 14,514,679 |
OTHER COMPREHENSIVE LOSS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exchange differences on translation of foreign operations |  |  |  |  | (392,697 | ) |  |  | 447,538 |  |  |  | (255,460 | ) |  |  | 719,875 |
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD |  |  |  |  | 9,400,495 |  |  |  | 8,594,445 |  |  |  | 18,884,912 |  |  |  | 15,234,554 |
Basic and diluted loss per share |  |  |  |  | 0.06 |  |  |  | 0.07 |  |  |  | 0.12 |  |  |  | 0.12 |
Weighted average number of common shares outstanding – basic and diluted |  |  |  |  | 154,972,579 |  |  |  | 121,283,186 |  |  |  | 152,199,879 |  |  |  | 119,773,438 |

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

| 6 |

Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity

(Expressed in Canadian dollars)

|  | Notes |  | Number of Shares |  |  | Preferred shares $ |  |  | Additional paid-in capital $ |  |  | Deficit $ |  |  | Accumulated Other Comprehensive Loss $ |  |  | Total Shareholders’ Equity $ |
BALANCE AS AT DECEMBER 31, 2022 |  | 11 | - |  | 116,521,343 |  |  |  | 31,516 |  |  |  | 77,302,736 |  |  |  | (72,190,747 | ) |  |  | (1,200,516 | ) |  |  | 3,942,989 |
Net loss for the period |  |  | - |  | - |  |  |  | - |  |  |  | - |  |  |  | (6,367,772 | ) |  |  | - |  |  |  | (6,367,772 | )
Share capital issued through private placement |  |  |  |  | 4,437,184 |  |  |  | - |  |  |  | 7,765,072 |  |  |  | - |  |  |  | - |  |  |  | 7,765,072 |
Share issue costs |  |  |  |  | - |  |  |  | - |  |  |  | (606,547 | ) |  |  | - |  |  |  | - |  |  |  | (606,547 | )
Fair value of lender warrants |  |  |  |  | - |  |  |  | - |  |  |  | 116,177 |  |  |  | - |  |  |  | - |  |  |  | 116,177 |
Exchange differences on translation of foreign operations |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (272,337 | ) |  |  | (272,337 | )
BALANCE AS AT MARCH 31, 2023 |  |  | - |  | 120,958,527 |  |  |  | 31,516 |  |  |  | 84,577,438 |  |  |  | (78,558,519 | ) |  |  | (1,472,853 | ) |  |  | 4,577,582 |
Net loss for the period |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (8,146,907 | ) |  |  | - |  |  |  | (8,146,907 | )
Share capital issued through private placement |  |  |  |  | 14,772,000 |  |  |  | - |  |  |  | 16,249,201 |  |  |  | - |  |  |  | - |  |  |  | 16,249,201 |
Share issue costs |  |  |  |  | - |  |  |  | - |  |  |  | (1,059,550 | ) |  |  | - |  |  |  | - |  |  |  | (1,059,550 | )
Fair value of lender warrants |  |  |  |  | - |  |  |  | - |  |  |  | 1,352,054 |  |  |  | - |  |  |  | - |  |  |  | 1,352,054 |
Exchange differences on translation of foreign operations |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (447,538 | ) |  |  | (447,538 | )
BALANCE AS AT JUNE 30, 2023 |  | 11 | - |  | 135,730,527 |  |  |  | 31,516 |  |  |  | 101,119,143 |  |  |  | (86,705,426 | ) |  |  | (1,920,391 | ) |  |  | 12,524,842 |
BALANCE AS AT DECEMBER 31, 2023 |  |  | - |  | 149,300,920 |  |  |  | 31,516 |  |  |  | 116,069,973 |  |  |  | (104,566,816 | ) |  |  | (1,788,987 | ) |  |  | 9,745,686 |
Net loss for the period |  |  | - |  | - |  |  |  | - |  |  |  | - |  |  |  | (9,347,180 | ) |  |  | - |  |  |  | (9,347,180 | )
Exercise of options, net |  |  |  |  | 126,259 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Share-based payment |  |  |  |  | - |  |  |  | - |  |  |  | 389,612 |  |  |  | - |  |  |  | - |  |  |  | 389,612 |
Exchange differences on translation of foreign operations |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (137,237 | ) |  |  | (137,237 | )
BALANCE AS AT MARCH 31, 2024 |  |  | - |  | 149,427,179 |  |  |  | 31,516 |  |  |  | 116,459,585 |  |  |  | (113,913,996 | ) |  |  | (1,926,224 | ) |  |  | 650,881 |
BALANCE |  |  | - |  | 149,427,179 |  |  |  | 31,516 |  |  |  | 116,459,585 |  |  |  | (113,913,996 | ) |  |  | (1,926,224 | ) |  |  | 650,881 |
Net loss for the period |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (9,793,192 | ) |  |  | - |  |  |  | (9,793,192 | )
Share capital issued through private placement |  |  |  |  | 36,281,409 |  |  |  | - |  |  |  | 28,760,081 |  |  |  | - |  |  |  | - |  |  |  | 28,760,081 |
Share issue costs |  |  |  |  | - |  |  |  | - |  |  |  | (1,734,507 | ) |  |  | - |  |  |  | - |  |  |  | (1,734,507 | )
Share-based payment |  |  |  |  | - |  |  |  | - |  |  |  | 389,612 |  |  |  | - |  |  |  | - |  |  |  | 389,612 |
Exchange differences on translation of foreign operations |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 392,697 |  |  |  | 392,697 |
BALANCE AS AT JUNE 30, 2024 |  | 11 | - |  | 185,708,588 |  |  |  | 31,516 |  |  |  | 143,874,771 |  |  |  | (123,707,188 | ) |  |  | (1,533,527 | ) |  |  | 18,665,572 |
Balance |  | 10 | - |  | 185,708,588 |  |  |  | 31,516 |  |  |  | 143,874,771 |  |  |  | (123,707,188 | ) |  |  | (1,533,527 | ) |  |  | 18,665,572 |

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

| 7 |

Unaudited Condensed Interim Consolidated Statements of Cash Flows

(Expressed in Canadian dollars)

|  | Six months Ended |
|  | June 30, 2024 $ |  |  | June 30, 2023 $ |
OPERATING ACTIVITIES |  |  |  |  |  |  |  |
Net loss for the period |  |  | (19,140,372 | ) |  |  | (14,514,679 | )
Interest payment on Term Loan |  |  | (1,038,412 | ) |  |  | - |
Interest payment on A&R Promissory Note |  |  | - |  |  |  | (412,329 | )
Items not affecting cash: |  |  |  |  |  |  |  |
DSUs granted |  |  | 564,913 |  |  |  | 306,405 |
Fair value movement of DSUs |  |  | (320,516 | ) |  |  | - |
Depreciation |  |  | 733,902 |  |  |  | 89,760 |
Provision for leave and severance |  |  | 259,983 |  |  |  | 163,866 |
Accrued interests and accretion on loans |  |  | 1,533,261 |  |  |  | 648,614 |
Share-based payment |  |  | 779,224 |  |  |  | - |
Warrant fair value movement |  |  | - |  |  |  | 116,177 |
Changes in non-cash working capital and non-current liability |  |  |  |  |  |  |  |
Prepaid expenses and other receivables |  |  | (134,824 | ) |  |  | (52,726 | )
Trade payables and accrued expenses |  |  | (6,934 | ) |  |  | (856,067 | )
Spare parts |  |  | (992,311 | ) |  |  | (212,135 | )
Net cash used in operating activities |  |  | (17,762,086 | ) |  |  | (14,723,114 | )
INVESTING ACTIVITIES |  |  |  |  |  |  |  |
Acquisition of property, plant and equipment |  |  | (128,277 | ) |  |  | (1,391,031 | )
Net cash used in investing activities |  |  | (128,277 | ) |  |  | (1,391,031 | )
FINANCING ACTIVITIES |  |  |  |  |  |  |  |
Proceeds from issuance of units |  |  | 27,454,421 |  |  |  | 23,814,272 |
Share issue costs |  |  | (278,847 | ) |  |  | (1,521,306 | )
Loan proceeds, net of fees |  |  | - |  |  |  | 14,304,202 |
NSR option |  |  | - |  |  |  | 2,750,000 |
A&R Promissory Note repayment |  |  | - |  |  |  | (7,000,000 | )
Vehicle loan payment |  |  | (45,171 | ) |  |  | (34,898 | )
Lease payment |  |  | (304,237 | ) |  |  | (95,479 | )
Net cash provided by financing activities |  |  | 26,826,166 |  |  |  | 32,216,791 |
Effect of exchange rate changes on cash and cash equivalents |  |  | (99,914 | ) |  |  | 342,255 |
Change in cash and cash equivalents for the period |  |  | 8,835,889 |  |  |  | 16,444,901 |
Cash and cash equivalents at the beginning of the period |  |  | 19,245,628 |  |  |  | 5,162,991 |
Cash and cash equivalents at the end of the period |  |  | 28,081,517 |  |  |  | 21,607,892 |
Supplemental cash flow information |  |  |  |  |  |  |  |
Income taxes paid |  |  | - |  |  |  | - |
Interest paid |  |  | 1,135,919 |  |  |  | 412,329 |

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

| 8 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

Premium Nickel Resources Ltd. (TSXV: PNRL) (the “Company” or “PNRL”) was founded upon the closing of a reverse takeover transaction (the “RTO”) whereby Premium Nickel Resources Corporation (“PNRC”) and 1000178269 Ontario Inc. a wholly-owned subsidiary of North American Nickel Inc. (“NAN”), amalgamated by way of a triangular amalgamation under the Business Corporations Act (Ontario) (the “OBCA”) on August 3, 2022. The common shares of PNRL (“Common Shares”) are listed and posted for trading on the TSX Venture Exchange (the “TSXV”) under the symbol “PNRL”.

Prior to the RTO, PNRC was a private company existing under the OBCA. PNRC was incorporated 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.

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.”

Currently, the Company’s principal business activity is the exploration and evaluation of mineral properties in Botswana through its wholly-owned subsidiaries.

The following corporate structure chart sets out details of the direct and indirect ownership of the principal subsidiaries of the Company:

Notes:

| (1) | Premium Nickel Group Proprietary Limited owns the Selkirk Assets (as defined below).
| (2) | Premium Nickel Resources Proprietary Limited owns the Selebi Assets (as defined below).

| 9 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

The Company’s head and registered office is located at One First Canadian Place, 100 King Street West, Suite 3400, Toronto, Ontario, Canada M5X 1A4.

The principal assets of the Company are the Selebi and Selebi North nickel-copper-cobalt (“Ni-Cu-Co”) mines (the “Selebi Mines”) in Botswana and related infrastructure (together, the “Selebi Assets”), as well as the nickel, copper, cobalt, platinum-group elements (“Ni-Cu-Co-PGE”) Selkirk mine (the “Selkirk Mine”) in Botswana, together with associated infrastructure and four surrounding prospecting licenses (collectively, the “Selkirk Assets”).

Going Concern

The Company, being in the exploration stage, is subject to risks and challenges similar to companies in a comparable stage of exploration and development. These risks include the challenges of securing adequate capital for exploration and advancement of the Company’s material projects, 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 June 30, 2024, the Company had no source of operating cash flows, nor any credit line currently in place. The Company incurred a net loss of $19,140,372 for the six months ended June 30, 2024. The Company’s committed cash obligations and expected level of expenses will vary depending on its operations.

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 evaluation, 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 operations. These material uncertainties cast substantial doubt about the Company’s ability to continue as a going concern. These 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.

The properties in which the Company currently has an interest are in pre-revenue stage. As such, the Company is dependent on external financing to fund its activities. In order to carry out the planned development 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.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of Compliance

These unaudited condensed interim consolidated financial statements were prepared in accordance with US GAAP for interim financial information and in accordance with the instructions in Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (“SEC”) for financial information.

Certain information or footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed interim consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

| 10 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

The accompanying unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023. The interim period results do not necessary indicate the results that may be expected for any other interim period or for the full fiscal year.

(b) Basis of preparation

These unaudited condensed interim consolidated financial statements have been prepared on a going concern basis under the historical cost convention, modified by the revaluation of any financial assets and financial liabilities where applicable. The preparation of consolidated financial statements in conformity with US GAAP 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.

The significant accounting policies used in the preparation of these unaudited condensed interim consolidated financial statements are consistent with those used in the preparation of the audited annual consolidated financial statements for the year ended December 31, 2023.

Operating segments are reported in a manner consistent with the internal reporting used for the audited annual consolidated financial statements. The Company determined that it has one reportable operating segment being that of the acquisition, exploration and evaluation of mineral properties in three geographic segments, which are Canada, Barbados and Botswana (Note 15).

(c) Basis of consolidation

These unaudited condensed interim consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries as summarized in the table below. All intercompany transactions, balances, income and expenses are eliminated upon consolidation.

SCHEDULE OF ITS WHOLLY-OWNED SUBSIDIARIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

Name of Entity |  | Place of Incorporation |  | Percentage Ownership |  |  | Functional Currency
Premium Nickel Resources Ltd. |  | Ontario, Canada |  |  |  |  |  | CAD
NAN Exploration Inc. |  | Ontario, Canada |  |  | 100 |  |  | CAD
PNR Amalco Ltd. |  | Ontario, Canada |  |  | 100 |  |  | CAD
Premium Nickel Resources International Ltd. |  | Barbados |  |  | 100 |  |  | USD
PNR Selkirk Group (Barbados) Limited |  | Barbados |  |  | 100 |  |  | USD
PNR Selebi (Barbados) Limited |  | Barbados |  |  | 100 |  |  | USD
Premium Nickel Group Proprietary Limited |  | Botswana |  |  | 100 |  |  | BWP
Premium Nickel Resources Proprietary Limited |  | Botswana |  |  | 100 |  |  | BWP

(d) Use of estimates and judgment

The preparation of the unaudited condensed interim consolidated financial statements in accordance with US GAAP requires management to make judgements, estimates and assumptions that affect the implementation of the accounting policies and the recorded amount of assets and liabilities, income, expenses, and disclosure of contingent liabilities. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.

| 11 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

Judgement

Information about judgements made in applying accounting policies that have most significant effect on the amounts recognized in these consolidated financial statements are the same as disclosed in Note 3 of the consolidated financial statements for the year ended December 31, 2023.

Estimates

Information about assumptions and estimates uncertainties as at June 30, 2024, that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities in the next financial year are the same as disclosed in Note 3 of the consolidated financial statement for the year ended December 31, 2023.

3. OTHER RECEIVABLES

A summary of the other receivables as at June 30, 2024 and December 31, 2023 is detailed in the table below:

SCHEDULE OF OTHER RECEIVABLES

|  | June 30, 2024 $ |  |  | December 31, 2023 $ |
HST paid on purchases |  |  | 558,806 |  |  |  | 301,618 |
VAT paid on purchases |  |  | 373,079 |  |  |  | 223,776 |
Other receivables |  |  | 7,441 |  |  |  | 7,441 |
Other receivables, net |  |  | 939,326 |  |  |  | 532,835 |

4. EXPLORATION AND EVALUATION ASSETS

SCHEDULE OF EXPLORATION AND EVALUATION ASSETS

|  | Botswana |  |  |  |
|  | Selebi $ |  |  | Selkirk $ |  |  | Total $ |
Balance, December 31, 2022 |  |  | 8,251,518 |  |  |  | 327,109 |  |  |  | 8,578,627 |
Addition costs |  |  | 483,883 |  |  |  | - |  |  |  | 483,883 |
Foreign currency translation |  |  | (449,878 | ) |  |  | (17,834 | ) |  |  | (467,712 | )
Balance, December 31, 2023 |  |  | 8,285,523 |  |  |  | 309,275 |  |  |  | 8,594,798 |
Foreign currency translation |  |  | 100,535 |  |  |  | 3,752 |  |  |  | 104,287 |
Balance, June 30, 2024 |  |  | 8,386,058 |  |  |  | 313,027 |  |  |  | 8,699,085 |

The following is a description of the Company’s exploration and evaluation assets and the related spending commitments.

Botswana Assets - Selebi and Selkirk

On September 28, 2021, the Company executed the Selebi Asset Purchase Agreement (“the “Selebi APA”) with the BCL liquidator to acquire the Selebi Assets formerly operated by BCL. On January 31, 2022, the Company closed the transaction and ownership of the Selebi Assets transferred to the Company.

Pursuant to the Selebi APA, the aggregate purchase price payable to the seller for the Selebi Assets shall be the sum of $76,862,200 (USD 56,750,000) which amount shall be paid in three instalments:

● | $2,086,830 (USD 1,750,000) payable on the closing date. This payment has been made.
● | $33,860,000 (USD 25,000,000) upon the earlier of: (a) approval by the Botswana Ministry of Mineral Resources, Green Technology and Energy Security (“MMRGTES”) of the Company’s Section 42 and Section 43 Applications (further extension of the mining license and conversion of the mining license into an operating license, respectively), and (b) on the expiry date of the study phase, January 31, 2025, which can be extended for one year with written notice.

| 12 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

● | The third instalment of $40,632,000 (USD 30,000,000) is payable on the completion of mine construction and production start-up (commissioning) by the Company on or before January 31, 2030, but not later than four years after the approval by the Minister of MMRGTES of the Company’s Section 42 and Section 43 Applications.
● | Payment of care and maintenance funding contribution in respect of the Selebi Assets for a total of $6,164,688 (USD 5,178,747) from March 22, 2021 to the closing date. This payment has been made.

The total acquisition cost of the Selebi Assets included the first instalment of $2,086,830 (USD 1,750,000) and the payment of the care and maintenance funding contribution of $6,164,688 (USD 5,178,747) for the assets. As per the terms 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 Company determines that the Selebi Assets are not economical. The Company also has an option to pay in advance the second and third payments in the event where the Company determines that the Selebi Assets are economical.

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.

PNRC also negotiated a separate asset purchase agreement (the “Selkirk APA”) with the liquidator of TNMC to acquire the Selkirk deposit and related infrastructure formerly operated by TNMC on January 20, 2022. The transaction closed on August 22, 2022.

The Selkirk APA does not provide for a purchase price or initial payment for the purchase of the assets. The acquisition cost of the Selkirk Mine of $327,109 (USD 244,954) was the care and maintenance funding contribution from April 1, 2021 to the closing date of the Selkirk APA. The Selkirk APA provides that if the Company elects to develop the Selkirk Mine first, the payment of the second Selebi instalment of $33,860,000 (USD 25,000,000) would be upon the approval by the Minister of MMRGTES of the Company’s Section 42 and Section 43 Applications (further extension of the Selkirk mining license and conversion of the Selkirk mining license into an operating license, respectively). For the third Selebi instalment of $40,632,000 (USD 30,000,000), if the Selkirk Mine were to be commissioned earlier than the Selebi Mines, the payment would trigger on the Selkirk Mine’s commission date.

On August 16, 2023, the Company entered into a binding commitment letter with the liquidator of BCL Limited, which is subject to customary final documentation, to acquire a 100% interest in two additional deposits (“Phikwe South” and the “Southeast Extension”) located adjacent to and immediately north of the Selebi North mine. The impact is to extend the northern boundary of the Selebi Mining License by 3.7 kilometres and increase the Selebi Mining License area from 115.0 square kilometres to 153.7 square kilometres. While the remaining historic resources at Phikwe South and the Southeast Extension occur within the expanded Selebi Mining License, the amended license intentionally does not include the historic mine workings and infrastructure at these previously-producing properties, and the Company has no liability for historic environmental issues at those sites.

The upfront cost to the Company to acquire these additional mineral properties is USD1,000,000. In addition, the Company agreed to additional work commitments of USD5,000,000 in the aggregate over the next four years. As a result of the extension of the Selebi Mining License, the remaining asset purchase obligations of the Company outlined in the original Selebi Mines asset purchase agreement with the Liquidator will each increase by 10%, $7,436,000 (USD 5,500,000) in total, while the trigger events remain unchanged. The existing 2% net smelter royalty (“NSR”) held by the Liquidator with respect to production from the Selebi Mining License will also apply to production from these additional deposits, subject to the Company’s existing buy-back right for 50% of the NSR (Note 10). The acquisition of the Phikwe South and the Southeast Extension deposits has not yet closed as at June 30, 2024.

| 13 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

General Exploration Expenses

Details of the general exploration expenses by nature are presented as follows:

SCHEDULE OF GENERAL EXPLORATION EXPENSES

For the six months ended June 30, 2024:

|  | Selebi $ |  |  | Selkirk $ |  |  | Other $ |  |  | Total $ |
Site operations & administration |  |  | 476,534 |  |  |  | 25,268 |  |  |  | 95,715 |  |  |  | 597,517 |
Care and maintenance |  |  | 1,375,283 |  |  |  | - |  |  |  | - |  |  |  | 1,375,283 |
Geology |  |  | 1,537,368 |  |  |  | 33,297 |  |  |  | - |  |  |  | 1,570,665 |
Drilling |  |  | 3,333,892 |  |  |  | 135,656 |  |  |  | - |  |  |  | 3,469,548 |
Geophysics |  |  | 529,177 |  |  |  | 18,106 |  |  |  | - |  |  |  | 547,283 |
Engineering |  |  | 3,238,434 |  |  |  | 24,178 |  |  |  | - |  |  |  | 3,262,612 |
Environmental, social and governance |  |  | 89,611 |  |  |  | - |  |  |  | - |  |  |  | 89,611 |
Metallurgy and processing |  |  | 5,574 |  |  |  | 25,068 |  |  |  | - |  |  |  | 30,642 |
Technical studies |  |  | 147,345 |  |  |  | 48,047 |  |  |  | - |  |  |  | 195,392 |
Health and safety |  |  | 96,589 |  |  |  | 43 |  |  |  | - |  |  |  | 96,632 |
Mine re-development |  |  | 19,091 |  |  |  | 25,486 |  |  |  | - |  |  |  | 44,577 |
Total |  |  | 10,848,898 |  |  |  | 335,149 |  |  |  | 95,715 |  |  |  | 11,279,762 |

For the six months ended June 30, 2023:

|  | Selebi $ |  |  | Selkirk $ |  |  | Other $ |  |  | Total $ |
Site operations & administration |  |  | 421,070 |  |  |  | 27,857 |  |  |  | 77,572 |  |  |  | 526,499 |
Care and maintenance |  |  | 1,587,152 |  |  |  | - |  |  |  | - |  |  |  | 1,587,152 |
Geology |  |  | 1,713,621 |  |  |  | 265,614 |  |  |  | - |  |  |  | 1,979,235 |
Drilling |  |  | 1,517,072 |  |  |  | 6,523 |  |  |  | - |  |  |  | 1,523,595 |
Geophysics |  |  | 891,036 |  |  |  | 17,792 |  |  |  | - |  |  |  | 908,828 |
Engineering |  |  | 2,070,020 |  |  |  | 14,020 |  |  |  | - |  |  |  | 2,084,040 |
Environmental, social and governance |  |  | 30,296 |  |  |  | - |  |  |  | - |  |  |  | 30,296 |
Metallurgy and processing |  |  | 39,744 |  |  |  | 80,622 |  |  |  | - |  |  |  | 120,366 |
Technical studies |  |  | 8,047 |  |  |  | 7,650 |  |  |  | - |  |  |  | 15,697 |
Health and safety |  |  | 146,637 |  |  |  | - |  |  |  | - |  |  |  | 146,637 |
Total Botswana projects |  |  | 8,424,695 |  |  |  | 420,078 |  |  |  | 77,572 |  |  |  | 8,922,345 |

| 14 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

5. PROPERTY, PLANT AND EQUIPMENT

The tables below set out costs and accumulated amortization as at June 30, 2024 and December 31, 2023:

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

Cost |  | Land and Buildings (ROU Assets) $ |  |  | Exploration Equipment (ROU Assets) $ |  |  | Exploration Equipment $ |  |  | Furniture and Fixtures $ |  |  | Generator $ |  |  | Vehicles $ |  |  | Computer and software $ |  |  | Total $ |
Balance – December 31, 2023 |  |  | 2,909,637 |  |  |  | 1,023,615 |  |  |  | 4,202,457 |  |  |  | 191,899 |  |  |  | 38,227 |  |  |  | 398,032 |  |  |  | 567,407 |  |  |  | 9,331,274 |
Additions |  |  | - |  |  |  | - |  |  |  | 128,277 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 128,277 |
Foreign currency translation |  |  | 35,304 |  |  |  | - |  |  |  | 47,034 |  |  |  | 2,570 |  |  |  | 464 |  |  |  | 4,829 |  |  |  | 28,325 |  |  |  | 118,526 |
Balance – June 30, 2024 |  |  | 2,944,941 |  |  |  | 1,023,615 |  |  |  | 4,377,768 |  |  |  | 194,469 |  |  |  | 38,691 |  |  |  | 402,861 |  |  |  | 595,732 |  |  |  | 9,578,077 |

Accumulated Depreciation |  | Land and Building (ROU Assets) |  |  | Exploration Equipment (ROU Assets) |  |  | Exploration Equipment |  |  | Furniture and Fixtures |  |  | Generator |  |  | Vehicles |  |  | Computer and software |  |  | Total |
Balance – December 31, 2023 |  |  | 170,256 |  |  |  | 85,301 |  |  |  | 307,559 |  |  |  | 19,079 |  |  |  | 8,549 |  |  |  | 106,083 |  |  |  | 145,948 |  |  |  | 842,775 |
Depreciation during the period |  |  | 54,356 |  |  |  | 102,362 |  |  |  | 433,069 |  |  |  | 7,031 |  |  |  | 3,846 |  |  |  | 50,056 |  |  |  | 83,182 |  |  |  | 733,902 |
Foreign currency translation |  |  | (2,695 | ) |  |  | - |  |  |  | (382 | ) |  |  | 274 |  |  |  | 127 |  |  |  | 1,589 |  |  |  | 21,330 |  |  |  | 20,243 |
Balance – June 30, 2024 |  |  | 221,917 |  |  |  | 187,663 |  |  |  | 740,246 |  |  |  | 26,384 |  |  |  | 12,522 |  |  |  | 157,728 |  |  |  | 250,460 |  |  |  | 1,596,920 |

Carrying Value |  | Land (ROU Assets) |  |  | Exploration Equipment (ROU Assets) |  |  | Exploration Equipment |  |  | Furniture and Fixtures |  |  | Generator |  |  | Vehicles |  |  | Computer and Software |  |  | Total |
Balance – December 31, 2023 |  |  | 2,739,381 |  |  |  | 938,314 |  |  |  | 3,894,898 |  |  |  | 172,820 |  |  |  | 29,678 |  |  |  | 291,949 |  |  |  | 421,459 |  |  |  | 8,488,499 |
Balance, Carrying Value |  |  | 2,739,381 |  |  |  | 938,314 |  |  |  | 3,894,898 |  |  |  | 172,820 |  |  |  | 29,678 |  |  |  | 291,949 |  |  |  | 421,459 |  |  |  | 8,488,499 |
Balance – June 30, 2024 |  |  | 2,723,024 |  |  |  | 835,952 |  |  |  | 3,637,522 |  |  |  | 168,085 |  |  |  | 26,169 |  |  |  | 245,133 |  |  |  | 345,272 |  |  |  | 7,981,157 |
Balance, Carrying Value |  |  | 2,723,024 |  |  |  | 835,952 |  |  |  | 3,637,522 |  |  |  | 168,085 |  |  |  | 26,169 |  |  |  | 245,133 |  |  |  | 345,272 |  |  |  | 7,981,157 |

| 15 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

Cost |  | Land and Buildings (ROU Assets) $ |  |  | Exploration Equipment (ROU Assets) $ |  |  | Exploration Equipment $ |  |  | Furniture and Fixtures $ |  |  | Generator $ |  |  | Vehicles $ |  |  | Computer and software $ |  |  | Total $ |
Balance – December 31, 2022 |  |  | 3,077,420 |  |  |  | - |  |  |  | 11,973 |  |  |  | 126,605 |  |  |  | 31,381 |  |  |  | 241,884 |  |  |  | 1,950 |  |  |  | 3,491,213 |
Balance, Cost |  |  | 3,077,420 |  |  |  | - |  |  |  | 11,973 |  |  |  | 126,605 |  |  |  | 31,381 |  |  |  | 241,884 |  |  |  | 1,950 |  |  |  | 3,491,213 |
Additions |  |  | - |  |  |  | 1,023,615 |  |  |  | 4,190,484 |  |  |  | 65,998 |  |  |  | 8,557 |  |  |  | 187,310 |  |  |  | 585,561 |  |  |  | 6,061,525 |
Additions, Cost |  |  | - |  |  |  | 1,023,615 |  |  |  | 4,190,484 |  |  |  | 65,998 |  |  |  | 8,557 |  |  |  | 187,310 |  |  |  | 585,561 |  |  |  | 6,061,525 |
Foreign currency translation |  |  | (167,783 | ) |  |  | - |  |  |  | - |  |  |  | (704 | ) |  |  | (1,711 | ) |  |  | (31,162 | ) |  |  | (20,104 | ) |  |  | (221,464 | )
Foreign currency translation, Cost |  |  | (167,783 | ) |  |  | - |  |  |  | - |  |  |  | (704 | ) |  |  | (1,711 | ) |  |  | (31,162 | ) |  |  | (20,104 | ) |  |  | (221,464 | )
Balance – December 31, 2023 |  |  | 2,909,637 |  |  |  | 1,023,615 |  |  |  | 4,202,457 |  |  |  | 191,899 |  |  |  | 38,227 |  |  |  | 398,032 |  |  |  | 567,407 |  |  |  | 9,331,274 |
Balance, Cost |  |  | 2,909,637 |  |  |  | 1,023,615 |  |  |  | 4,202,457 |  |  |  | 191,899 |  |  |  | 38,227 |  |  |  | 398,032 |  |  |  | 567,407 |  |  |  | 9,331,274 |

Accumulated Depreciation |  | Land and Building (ROU Assets) |  |  | Exploration Equipment (ROU Assets) |  |  | Exploration Equipment |  |  | Furniture and Fixtures |  |  | Generator |  |  | Vehicles |  |  | Computer and software |  |  | Total |
Balance – December 31, 2022 |  |  | 51,123 |  |  |  | - |  |  |  | 1,447 |  |  |  | 1,872 |  |  |  | 562 |  |  |  | 39,589 |  |  |  | 1,950 |  |  |  | 96,543 |
Balance, Accumulated Depreciation |  |  | 51,123 |  |  |  | - |  |  |  | 1,447 |  |  |  | 1,872 |  |  |  | 562 |  |  |  | 39,589 |  |  |  | 1,950 |  |  |  | 96,543 |
Depreciation during the year |  |  | 119,133 |  |  |  | 85,301 |  |  |  | 306,112 |  |  |  | 14,030 |  |  |  | 6,212 |  |  |  | 69,997 |  |  |  | 143,998 |  |  |  | 744,783 |
Depreciation, Accumulated Depreciation |  |  | 119,133 |  |  |  | 85,301 |  |  |  | 306,112 |  |  |  | 14,030 |  |  |  | 6,212 |  |  |  | 69,997 |  |  |  | 143,998 |  |  |  | 744,783 |
Foreign currency translation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,177 |  |  |  | 1,775 |  |  |  | (3,503 | ) |  |  | - |  |  |  | 1,449 |
Foreign Currency Translation Accumulated Depreciation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,177 |  |  |  | 1,775 |  |  |  | (3,503 | ) |  |  | - |  |  |  | 1,449 |
Balance – December 31, 2023 |  |  | 170,256 |  |  |  | 85,301 |  |  |  | 307,559 |  |  |  | 19,079 |  |  |  | 8,549 |  |  |  | 106,083 |  |  |  | 145,948 |  |  |  | 842,775 |
Balance, Accumulated Depreciation |  |  | 170,256 |  |  |  | 85,301 |  |  |  | 307,559 |  |  |  | 19,079 |  |  |  | 8,549 |  |  |  | 106,083 |  |  |  | 145,948 |  |  |  | 842,775 |

Carrying Value |  | Land (ROU Assets) |  |  | Exploration Equipment (ROU Assets) |  |  | Exploration Equipment |  |  | Furniture and Fixtures |  |  | Generator |  |  | Vehicles |  |  | Computer and Software |  |  | Total |
Balance – December 31, 2022 |  |  | 3,026,297 |  |  |  | - |  |  |  | 10,526 |  |  |  | 124,733 |  |  |  | 30,819 |  |  |  | 202,295 |  |  |  | - |  |  |  | 3,394,670 |
Balance, Carrying Value |  |  | 3,026,297 |  |  |  | - |  |  |  | 10,526 |  |  |  | 124,733 |  |  |  | 30,819 |  |  |  | 202,295 |  |  |  | - |  |  |  | 3,394,670 |
Balance – December 31, 2023 |  |  | 2,739,381 |  |  |  | 938,314 |  |  |  | 3,894,898 |  |  |  | 172,820 |  |  |  | 29,678 |  |  |  | 291,949 |  |  |  | 421,459 |  |  |  | 8,488,499 |
Balance, Carrying Value |  |  | 2,739,381 |  |  |  | 938,314 |  |  |  | 3,894,898 |  |  |  | 172,820 |  |  |  | 29,678 |  |  |  | 291,949 |  |  |  | 421,459 |  |  |  | 8,488,499 |

Additions to property, plant and equipment during the year ended December 31, 2023 included the purchase of drilling equipment for $1,023,000 through a lease agreement with a drilling company (Note 9) as well as vehicles financed through a local Botswana bank.

| 16 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

6. TRADE PAYABLES AND ACCRUED LIABILITIES

SCHEDULE OF TRADE PAYABLES AND ACCRUED LIABILITIES

|  | June 30, 2024 $ |  |  | December 31, 2023 $ |
Amounts due to related parties (Note 12) |  |  | 169,667 |  |  |  | 93,795 |
Trade payables |  |  | 2,803,781 |  |  |  | 2,383,196 |
Accrued liabilities |  |  | 1,299,765 |  |  |  | 1,803,155 |
Total trade payables and accrued liabilities |  |  | 4,273,213 |  |  |  | 4,280,146 |

7. TERM LOAN

On June 28, 2023, the Company closed a financing with Cymbria Corporation (“Cymbria”), EdgePoint Investment Group Inc. and certain other entities managed by it (“EdgePoint”) for aggregate gross proceeds to PNRL of $33,999,200. The financing included three concurrent and inter-conditional transactions (collectively the “2023 Financing Transactions”) comprised of an equity offering of units for $16,249,200 (the “Equity Financing”), a three year term loan of $15,000,000 (the “Term Loan”) and option payments of $2,750,000 (the “Option Payment”) to acquire a 0.5% net smelter returns royalty on the Company’s Selebi Mines and Selkirk Mine in certain circumstances upon payment of further consideration (Note 9).

The Term Loan has a principal amount of $15,000,000 and bears interest at a rate of 10% per annum payable quarterly in arrears. The principal amount of the Term Loan will mature and be payable on the third anniversary of the date of issue. The obligations of the Company pursuant to the Term Loan are fully and unconditionally guaranteed by each of the Company’s existing and future subsidiaries. The Term Loan is secured by a pledge of all the shares of the Company’s subsidiaries as well as by way of a general security agreement at the parent level and debentures and hypothecations at the subsidiary level. The Term Loan is subject to certain covenants and provisions on events of default, repayments and mandatory prepayments, including:

| ● | increase in the interest rate payable on the Term Loan to 15% per annum upon the occurrence of an event of default;
| ● | the Company may prepay all or any portion of the principal amount outstanding with a minimum repayment amount of $500,000 and in an integral multiple of $100,000, together with all accrued and unpaid interest on the principal amount being repaid;
| ● | if prepayment occurs within one year of the closing date, a prepayment fee in an amount equal to 10% of the principal amount of the Term Loan being prepaid less interest paid or payable on or prior to the date of prepayment attributable to the portion of the Term Loan (“Prepayment Fee”);
| ● | mandatory prepayment shall be made when the Company has non-ordinary course asset sales or other dispositions of property or the Company receives cash from the issuance of indebtedness for borrowed money and all of the net cash proceeds from assets sales or new loans shall be applied to repay the principal amount of the Term Loan together with all accrued and unpaid interest on the principal amount being repaid as well as the Prepayment Fee if such mandatory prepayment occurs within one year of the closing date; and
| ● | in the event of change of control, the Company shall repay the Term Loan in full plus a fee equal to 10% of the then-outstanding principal amount of the Term Loan.

In connection with the Term Loan, the Company issued an aggregate of 2,000,000, non-transferable common share purchase warrants (the “Non-Transferable Warrants”) to Cymbria. Each Non-Transferable Warrant is excisable by Cymbria to purchase one Common Share upon payment of the cash purchase price of $1.4375 per Common Share for a period of three years from the issuance thereof.

Further, on December 14, 2023, in accordance with the terms of a second amended and restated commitment letter dated December 3, 2023 (the “Second A&R Commitment Letter”), the Company and Cymbria closed an amendment to the terms of their existing Term Loan pursuant to which the Company increased the principal amount of the Term Loan by $5,882,353 (the “Additional Principal Amount”) from $15,000,000 to $20,882,353. The Additional Principal Amount was subject to an original issue discount of approximately 15% and was advanced by the lender to the Company as a single advance of $5,000,000. The Additional Principal Amount forms a part of the Term Loan and, except as otherwise set out in the Second A&R Commitment Letter, is on the same terms and conditions applicable to the Term Loan. For certainty, the Additional Principal Amount bears interest at a rate of 10% per annum calculated and payable quarterly in arrears and will mature and be payable on June 28, 2026, which, in each case, is consistent with the terms and conditions applicable to the Term Loan. As consideration for entering into the Amended Term Loan, the Company issued an additional 700,000 non-transferable common share purchase warrants (collectively, the “Additional Warrants”) to the lender, with each Additional Warrant entitling the lender to acquire one Common Share at a price of $1.4375 per Common Share until June 28, 2026. The shares issued for exercise of the Additional Warrants are subject to a hold period of four months plus a day from the date of issue and the resale rules of applicable securities legislation and policies of the TSXV.

| 17 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

The Company evaluated the amendment of the Term Loan and determined that it qualified as a non-substantial modification under ASC 470. Therefore, a new effective interest rate was determined based on the carrying amount of the original debt instrument, adjusted for the fair value of the Additional Warrants resulting from the modification, and the revised cash flows.

The fair value of the Non-Transferable Warrants was estimated at $1,435,350 and $275,961 respectively, using the Black-Scholes Option Pricing Model. At initial closing, the accounting was based on relative fair value under ASC 470, with proceeds and transaction costs allocated between the Term Loan and the Non-Transferrable Warrants. The Non-Transferrable Warrants were allocated $1,352,054, including $83,296 in transaction costs. The Additional Warrants were accounted for as transaction costs for obtaining the Additional Principal Amount. As such, $1,352,054 and $275,961 respectively were recorded in equity.

The fair value of the Non-Transferable Warrants was calculated using the following assumptions:

SCHEDULE OF FAIR VALUE OF NON-TRANSFERABLE WARRANTS

|  | June 28, 2023 |  |  | December 14, 2023 |
Expected dividend yield |  |  | 0 | % |  |  | 0 | %
Stock price |  | $ | 1.35 |  |  | $ | 1.14 |
Expected share price volatility |  |  | 92.06 | % |  |  | 63.54 | %
Risk free interest rate |  |  | 4.13 | % |  |  | 3.73 | %
Expected life of warrant |  |  | 3 years |  |  |  | 2.54 years |

The Company used $7,637,329 of the proceeds from the Term Loan to prepay all principal, interest and fees owing by the Company pursuant to the A&R Promissory Note (defined in Note 8) in favour of Pinnacle Island LP.

For the six months ended June 30, 2024, the Company paid $1,038,412 of interest costs to Cymbria (June 30, 2023 – Nil).

| 18 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

The following is a continuity of the Term Loan:

SCHEDULE OF CONTINUITY OF TERM LOAN

|  | $ |
Principal amount of the Term Loan |  |  | 15,000,000 |
Fair value of the attached warrants |  |  | (1,435,350 | )
Term Loan at fair value on issuance, June 28, 2023 |  |  | 13,564,650 |
Transaction costs |  |  | (787,175 | )
Accretion of warrant value and transaction costs |  |  | 631,540 |
Fair value of Term Loan as of December 14, 2023 |  |  | 13,409,015 |
Additional principal amount of Term Loan on Dec 14, 2023 |  |  | 5,882,353 |
Term Loan issue discount |  |  | (882,353 | )
Fair value of the attached warrants |  |  | (275,961 | )
Transaction fee for modification |  |  | (219,212 | )
Fair value of modified Term Loan as of December 14, 2023 |  |  | 17,913,842 |
Accretion of warrant value and transaction costs |  |  | 42,581 |
Term Loan balance, December 31, 2023 |  |  | 17,956,423 |
Accrued interest |  |  | 1,038,412 |
Accretion of warrant value and transaction costs |  |  | 492,044 |
Interest paid |  |  | (1,038,412 | )
Term Loan balance, June 30, 2024 |  |  | 18,448,467 |

Fort Capital Partners acted as financial advisor to PNRL on the debt portion of the 2023 Financing Transactions and was paid cash fees of $375,000 and $147,059 by PNRL, equal to 2.5% of the original principal amount and the Additional Principal Amount, respectively. Legal fees related to the 2023 Financing Transactions totaled $736,067, of which $495,471 was allocated to the original Term Loan. Legal fees of $72,153 associated with the Second A&R Commitment Letter were recorded and amortized over the remaining terms of the Term Loan. As noted above, certain transaction costs in relation to the original principal amounts were allocated to the Non-Transferrable Warrants based on the relative fair value method under ASC 470.

8. PROMISSORY NOTE

On November 21, 2022, the Company announced a $7,000,000 bridge loan (the “Bridge Loan”) financing from Pinnacle Island LP (the “Lender”). The Bridge Loan financing closed on November 25, 2022 and net proceeds of $6,740,000 were received by the Company (after deducting the commitment fee of $260,000). The Bridge Loan was evidenced by the issuance of a promissory note by the Company to the Lender (the “Promissory Note”). The Promissory Note had a principal amount of $7 million and bore interest at a rate of 10% per annum, calculated monthly and initially payable on February 22, 2023, being the maturity date of the Promissory Note, with a right of the Company to extend the maturity date to March 22, 2023 by providing written notice to the Lender by February 15, 2023. The Company extended the maturity of the Promissory Note to March 22, 2023.

On March 17, 2023, the Company entered into an amended and restated Promissory Note (the “A&R Promissory Note”) extending the maturity of the Promissory Note from March 22, 2023 to November 24, 2023 (the “Extension”). All other terms of the Promissory Note remained the same. In connection with the Extension and entering into of the A&R Promissory Note, the Company agreed to pay an amendment and restatement fee of $225,000 and issued 350,000 non-transferable common share purchase warrants to the Lender (the “Lender Warrants”). Each Lender Warrant is exercisable to acquire one Common Share of the Company at a price of $1.75 per Common Share for a period of one year from the date of the A&R Promissory Note. In connection with the Extension and issuance of the Lender Warrants, the 119,229 common share purchase warrants previously issued to the Lender in connection with the initial issuance of the Promissory Note were cancelled concurrently with the Extension.

| 19 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

In connection with the A&R Promissory Note, accretion expense of $682,547 was recorded for the six months ended June 30, 2023.

The fair value of the liability of the Lender Warrants was estimated at $116,177 using the Black-Scholes Option Pricing Model. The fair value of the Lender Warrants and the amendment and restatement fee of $225,000 was added to the liability of the A&R Promissory Note and amortized over the remaining life of the A&R Promissory Note.

The fair value of the Lender warrants was calculated using the following assumptions:

SCHEDULE OF LENDER WARRANTS

|  | March 31, 2023 |
Expected dividend yield |  |  | 0 | %
Stock price |  | $ | 1.40 |
Expected share price volatility |  |  | 77.2 | %
Risk free interest rate |  |  | 3.49 | %
Expected life of warrant |  |  | 1 year |

The volatility was determined by calculating the historical volatility of stock prices of the Company over one year using daily closing prices. The formula used to compute historical volatility is the standard deviation of the logarithmic returns.

On June 28, 2023, the Company repaid the Promissory Note in full.

9. LEASE LIABILITIES

Syringa Lodge

On July 9, 2022, the Company executed a sales agreement (the “Lodge Agreement”) with Tuli Tourism Pty Ltd. (the “Seller”) for the Syringa Lodge in Botswana.

As per the Lodge Agreement, the aggregate purchase price payable to the Seller shall be the sum of $3,213,404 (BWP 30,720,000). A deposit of $482,011 (BWP 4,608,000) was paid on August 17, 2022. The balance is payable in two installments of $1,306,906 (BWP 13,056,000) on each of July 1, 2023 (paid) and August 1, 2024.

In addition to the above purchase price, the Company is required to pay to the Seller an agreed interest amount in twelve equal monthly instalments of $13,657 (BWP 130,560) followed by twelve equal monthly instalments of $6,828 (BWP 65,280). The implied discount rate for the arrangement is 6%. The Company recognized a finance lease for this lease.

Drilling Equipment

On March 14, 2023, the Company entered into a drilling equipment supply agreement (the “Equipment Agreement”) with Forage Fusion Drilling Ltd. (“Forage”) to purchase specific drilling equipment on a “rent to own” basis with the purchase price to be paid in monthly payments.

As per the Equipment Agreement, the aggregate purchase price payable to Forage is $2,942,000. A deposit of $1,700,000 was paid in March 2023. The balance is payable in twelve equal monthly instalments of $103,500. The equipment arrived at the site in July 2023. Based on the stated equipment purchase price of $2,735,000 and monthly installments, the implied interest rate for the arrangement is 35%. The Company recognized a finance lease for this lease.

| 20 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

The following table presents lease cost and other supplemental lease information:

SCHEDULE OF LEASE COST AND OTHER SUPPLEMENTAL LEASE

|  | June 30, 2024 $ |  |  | June 30, 2023 $ |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  |  | 156,718 |  |  |  | 62,336 |
Interest expense on lease liabilities |  |  | 90,469 |  |  |  | 78,906 |
Cash paid for finance lease liabilities |  |  | (304,237 | ) |  |  | (95,479 | )

10. NSR OPTION

Concurrently with the closings of the Equity Financing and the Term Loan on June 28, 2023, Cymbria paid an aggregate of $2,750,000 (“Option Payment”) to two subsidiaries of PNRL to acquire a right to participate with such subsidiaries in the exercise of certain contractual rights, as and when the same may be exercised by such subsidiaries. The Option Payment was allocated to PNRP and PNGP (defined below) for $2,500,000 and $250,000, respectively.

As the NSR options are exercisable entirely at the discretion of Cymbria and the underlying projects are in the exploration stage, the fair value of the call and put on the option as at June 30, 2024 and December 31, 2023 is nil. The Option payment received in cash was recorded as a non-current liability.

PNRL’s indirect wholly-owned subsidiary Premium Nickel Resources Proprietary Limited (“PNRP”) acquired the Selebi Mines in January 2022 out of liquidation. Pursuant to the acquisition agreement, the liquidator retained a 2% net smelter returns royalty on the Selebi Mines (the “Selebi NSR”). PNRP has a contractual right to repurchase one-half of the Selebi NSR at a future time on payment by PNRP to the liquidator of USD 20,000,000.

PNRL’s indirect wholly-owned subsidiary Premium Nickel Group Proprietary Limited (“PNGP”) acquired the Selkirk Mine in August 2022 out of liquidation. Pursuant to the acquisition agreement, the liquidator retained a 1% net smelter returns royalty on the Selkirk Mine (the “Selkirk NSR” and together with the Selebi NSR, the “NSRs”). PNGP has a contractual right to repurchase the entirety of the Selkirk NSR at a future time on payment by PNGP to the liquidator of USD 2,000,000.

Each of PNRP and PNGP has agreed to grant Cymbria, in exchange for the Option Payment, an option to participate in any such repurchase of the applicable portion of its NSR from the relevant liquidator. Cymbria will, following the exercise of its option to participate in any such repurchase, acquire a 0.5% net smelter returns royalty on the applicable property by paying an amount equal to one half of the repurchase price payable by PNRP or PNGP pursuant to the applicable NSR, less the Option Payment paid at closing pursuant to the relevant option agreement among Cymbria and PNRP or PNGP, as applicable. Cymbria has the right to put its options back to PNRP and PNGP in certain circumstances in return for the reimbursement of the applicable portion of the Option Payment.

Under the NSR option purchase agreements, Cymbria could acquire a 0.5% net smelter returns royalty on the Company’s Selebi Mines and Selkirk Mine upon payment of $10,675,231 (USD 8,102,500) and $1,067,523 (USD 810,250), respectively.

11. SHARE CAPITAL, WARRANTS AND OPTIONS

The authorized capital of the Company comprises an unlimited number of Common Shares without par value and 100,000,000 Series 1 convertible preferred shares without par value.

| 21 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

a) | Common Shares Issued and Outstanding

During the six months ended June 30, 2024, 126,259 Common Shares were issued for the net exercise of 278,100 options and 36,281,409 Common Shares were issued as a result of the following financing transactions:

On June 14, 2024, the Company closed the first tranche of a non-brokered private placement offering (the “June 2024 Financing”), pursuant to which the Company issued an aggregate 19,234,614 units of the Company (the “Units”) at a price of $0.78 per Unit (the “Issue Price”) for aggregate gross proceeds of approximately $15 million. Each Unit is comprised of one Common Share and one common share purchase warrant of the Company (each, a “Warrant”).

On June 21, 2024, the Company closed the second tranche of the June 2024 Financing and issued an additional 16,021,795 Units at the Issue Price for gross proceeds of approximately $12.5 million. Together with proceeds from the first tranche, the total size of the June 2024 Financing is approximately $27.5 million.

Each Warrant entitles the holder thereof to acquire one Common Share at any time prior to 5:00 p.m. (Eastern Standard time) for a period expiring 60 months following the date of issuance (the “Expiry Date”) at a price of $1.10 per Common Share, subject to acceleration as described herein. If, at any time prior to the Expiry Date, the volume-weighted average trading price of the Common Shares on the TSXV (or such other principal exchange or market where the Common Shares are then listed or quoted for trading) is at least $2.00 per Common Share for a period of 20 trading days, the Company may, at its option, elect to accelerate the Expiry Date to a date (the “Accelerated Expiry Date”) that is not less than 30 days following the date that the Company provides written notice to the holders of the Warrants of the Accelerated Expiry Date.

The net proceeds of the June 2024 Financing will be used by the Company to advance the exploration and development of its past-producing nickel-copper-cobalt sulphide assets in Botswana and for general corporate and working capital purposes. All securities issued under the June 2024 Financing are subject to a hold period of four months plus one day from the date of issuance in accordance with applicable Canadian securities laws and the policies of the TSXV. In connection with the June 2024 Financing, SCP Resource Finance LP (“SCP”), in its capacity as financial advisor to the Company, was paid an advisory fee, which the Company has satisfied by issuing to SCP an aggregate of 1,025,000 Units at a deemed issue price equal to the Issue Price (comprised of 1,025,000 Common Shares and 1,025,000 non-transferable Warrants), and Fort Capital was paid an advisory fee of $250,000, in each case in consideration for providing certain advisory services to the Company in connection with the June 2024 Financing.

The fair value of the Warrants in connection with the June 2024 Financing was calculated using the Monte Carlo model. The fair value of the Warrant issued under the June 14, 2024 and the June 21, 2024 tranches of the June 2024 Financing were estimated at $4,806,732 and $4,359,063, respectively. Gross proceeds raised of $27,499,999 and related issuance costs of $250,000 in cash and the value of $1,087,755 for 1,025,000 Units granted to SCP using below inputs were allocated to the Common Shares and the Warrants based on relative fair values. The key inputs used in the Monte-Carlo model were as follows:

SCHEDULE OF FAIR VALUE OF WARRANTS

|  | June 14, 2024 |  |  | June 21, 2024 |
Expected dividend yield |  |  | 0 | % |  |  | 0 | %
Stock price |  | $ | 0.81 |  |  | $ | 0.84 |
Expected share price volatility |  |  | 83.17 | % |  |  | 83.71 | %
Risk free interest rate |  |  | 3.23 | % |  |  | 3.30 | %
Expected life of warrant |  |  | 5 years |  |  |  | 5 years |

During the year ended December 31, 2023, the Company completed the following financing transactions:

On February 24, 2023, the Company issued 4,437,184 Common Shares at a price of $1.75 per share for gross proceeds of $7,765,072 upon the closing of a brokered private placement (the “February 2023 Financing”). In connection with the February 2023 Financing, the Company: (a) paid to the agents a cash commission of $473,383, equal to 6% of the gross proceeds (other than on certain president’s list purchasers on which a cash commission of 3% was paid); and (b) issued to the agents that number of non-transferable broker warrants of the Company (the “Broker Warrants”) as is equal to 6% of the number of Common Shares sold under the February 2023 Financing (other than on Common Shares issued to president’s list purchasers on which Broker Warrants equal to 3% were issued). Each Broker Warrant is exercisable to acquire one Common Share at an exercise price of $1.75 per Common Share until February 24, 2025. A total of 221,448 broker warrants were issued to the agents under the February 2023 Financing. The fair value of the warrants was estimated at $167,939 using the Black-Scholes Option Pricing Model. Legal fees related the February 2023 Financing of $133,164 were also recorded as a share issuance cost.

| 22 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

On June 28, 2023, the Company issued 14,772,000 units at a price of $1.10 per unit to EdgePoint for aggregate gross proceeds of $16,249,200 upon the closing of the 2023 Financing Transactions. Each unit comprises one Common Share of PNRL and 22.5% of one whole common share purchase warrant (each a “Transferable Warrant” and together the “Transferable Warrants”). The total whole number of Transferable Warrants issuable in the Equity Financing is 3,324,000. Each Transferable Warrant may be exercised by the holder thereof to purchase one Common Share at an exercise price of $1.4375 per Common Share for a period of three years. The fair value of the Transferable Warrants was estimated at $1,898,349 using a proportionate allocation method based on the fair value of each component (Common Shares and warrants). The fair value of the warrants is calculated using the Black-Scholes Option Pricing Model while the fair value of the shares is determined by the stock price on the closing date of the Equity Financing times the total number of shares issued.

Fort Capital Partners acted as financial advisor to PNRL on the equity portion of the 2023 Financing Transactions and was paid cash fees of $812,460 by PNRL, equal to 5.0% of the gross proceeds of the equity portion of the 2023 Financing Transactions. Legal fees related to the 2023 Financing Transactions (Note 7) totaled $736,067, of which $240,596 was recorded as share issuance cost.

The fair value of the Transferable Warrants in connection with the February 2023 Financing and the 2023 Financing Transactions were calculated using the following assumptions:

SCHEDULE OF FAIR VALUE OF WARRANTS IN CONNECTION WITH FINANCING TRANSACTIONS

|  | February 24, 2023 |  |  | June 28, 2023 |
Expected dividend yield |  |  | 0 | % |  |  | 0 | %
Expected forfeiture rate |  |  | 0 | % |  |  | 0 | %
Stock price |  | $ | 1.73 |  |  | $ | 1.35 |
Expected share price volatility |  |  | 77.52 | % |  |  | 92.06 | %
Risk free interest rate |  |  | 4.28 | % |  |  | 4.13 | %
Expected life of warrant |  |  | 2 years |  |  |  | 3 years |

The volatility was determined by calculating the historical volatility of stock prices of the Company over a period as the expected life of the Transferable Warrants using daily closing prices. The formula used to compute historical volatility is the standard deviation of the logarithmic returns.

On December 14, 2023, the company closed an equity and debt financing package of approximately $21.6 million, comprised of a brokered private placement (the “Private Placement”) and amended Term Loan (Note 10). The Private Placement was completed in accordance with the terms of an agency agreement dated December 14, 2023 and entered into by the Company with Cormark Securities Inc. and BMO Capital Markets, as co-lead agents, and Canaccord Genuity Corp., Fort Capital Securities Ltd. and Paradigm Capital Inc. (collectively, the “Agents”). Under the Private Placement, the Company issued an aggregate of 13,133,367 Common Shares at a price of $1.20 per Common Share for aggregate gross proceeds of $15,760,040. In consideration for the services provided by the Agents under the Private Placement, the Company paid to the Agents an aggregate cash commission of $796,983, representing 6% of the gross proceeds of the offering (other than in respect of subscribers included on a president’s list formed by the Company, for which a reduced commission of 3% of the gross proceeds was paid). In connection with the Private Placement, EdgePoint exercised its participation right in respect of the Private Placement (the “Participation Right”) and subscribed for an aggregate of 1,265,800 Common Shares. EdgePoint was granted the Participation Right pursuant to the terms of a subscription agreement between the Company and EdgePoint dated June 28, 2023.

| 23 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

b) | Warrants

The following summarizes common share purchase warrant activity for the six months ended June 30, 2024:

SUMMARY OF COMMON SHARE PURCHASE WARRANT ACTIVITY

|  | June 30, 2024 |  |  | December 31, 2023 |
|  | Number Outstanding |  |  | Weighted Average Exercise Price ($) |  |  | Number Outstanding |  |  | Weighted Average Exercise Price ($) |
Outstanding, beginning of the period |  |  | 6,891,099 |  |  |  | 1.50 |  |  |  | 1,098,786 |  |  |  | 1.96 |
Issued |  |  | 36,281,409 |  |  |  | 1.10 |  |  |  | 6,595,448 |  |  |  | 1.46 |
Exercised |  |  | - |  |  |  | - |  |  |  | (100,000 | ) |  |  | (1.75 | )
Expired |  |  | (350,000 | ) |  |  | (1.75 | ) |  |  | (703,135 | ) |  |  | (1.80 | )
Outstanding, end of the period |  |  | 42,822,508 |  |  |  | 1.16 |  |  |  | 6,891,099 |  |  |  | 1.50 |

At June 30, 2024, the Company had outstanding common share purchase warrants exercisable to acquire Common Shares as follows:

Warrants Outstanding |  |  | Expiry Date |  | Exercise Price ($) |  |  | Weighted Average remaining contractual life (years) |
| 295,651 |  |  | August 3, 2024 |  |  | 2.40 |  |  |  | 0.00 |
| 221,448 |  |  | February 24, 2025 |  |  | 1.75 |  |  |  | 0.00 |
| 5,324,000 |  |  | June 28, 2026 |  |  | 1.44 |  |  |  | 0.25 |
| 700,000 |  |  | June 28, 2026 |  |  | 1.44 |  |  |  | 0.03 |
| 20,259,614 |  |  | June 14, 2029 |  |  | 1.10 |  |  |  | 2.35 |
| 16,021,795 |  |  | June 21, 2029 |  |  | 1.10 |  |  |  | 1.86 |
| 42,822,508 |  |  |  |  |  |  |  |  |  | 4.49 |

c) | Stock Options

The Company has adopted a Stock Option Plan (the “Plan”) providing the authority to grant options to directors, officers, employees and consultants enabling them to acquire up to 27,100,000 Common Shares of the Company. Under the Plan, the exercise price of each option shall not be less than the discounted market price on the grant date (where the Common Shares are listed on the TSXV, discounted market price means the last closing price per Common Share on the trading day immediately preceding the day on which the Company announces the grant of the option less the maximum discount permitted under the TSXV Policies applicable to options) and as approved by the Board of directors of the Company (the “Board of Directors”). The options can be granted for a maximum term of ten years.

A summary of option activity under the Plan during the six months ended June 30, 2024 and the year ended December 31, 2023 is as follows:

SCHEDULE OF OPTION ACTIVITY

|  | June 30, 2024 |  |  | December 31, 2023 |
|  | Number Outstanding |  |  | Weighted Average Exercise Price ($) |  |  | Number Outstanding |  |  | Weighted Average Exercise Price ($) |
Outstanding, beginning of the period |  |  | 13,487,921 |  |  |  | 1.39 |  |  |  | 10,407,044 |  |  |  | 1.10 |
Issued |  |  | - |  |  |  | - |  |  |  | 3,833,277 |  |  |  | 1.75 |
Exercised |  |  | (278,100 | ) |  |  | (0.86 | ) |  |  | (488,900 | ) |  |  | (0.49 | )
Cancelled |  |  | (150,000 | ) |  |  | (1.75 | ) |  |  | (263,500 | ) |  |  | (2.40 | )
Outstanding, end of the period |  |  | 13,059,821 |  |  |  | 1.39 |  |  |  | 13,487,921 |  |  |  | 1.39 |

| 24 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

During the year ended December 31, 2023, the Company granted an aggregate of 3,833,277 stock options to employees, directors, officers and consultants with a term of five years. The options have an exercise price of $1.75 per Common Share and vest annually in equal thirds beginning on the first anniversary of the date of grant. As at December 31, 2023, none of the options granted were vested. During the six months ended June 30, 2024, a total of $779,224 (Q2 2023 – Nil) was recorded as share-based payment expense and credited to additional paid-in capital.

The fair value of stock options granted during the year ended December 31, 2023 was determined using the following assumptions:

SCHEDULE OF FAIR VALUE OF STOCK OPTION GRANTED

|  | December 31, 2023 |
Expected dividend yield |  |  | 0 | %
Expected forfeiture rate |  |  | 0 | %
Expected share price volatility |  |  | 87.92 | %
Risk free interest rate |  |  | 4.28-4.68% |
Expected life of options |  |  | 3-4 years |

Details of options outstanding as at June 30, 2024 are as follows:

SCHEDULE OF DETAILS OF OPTIONS OUTSTANDING

Options Outstanding |  |  | Options Exercisable |  |  | Expiry Date |  | Exercise Price ($) |  |  | Weighted average remaining contractual life (years) |
| 660,000 |  |  |  | 660,000 |  |  | February 24, 2025 |  |  | 0.80 |  |  |  | 0.03 |
| 240,000 |  |  |  | 240,000 |  |  | August 19, 2025 |  |  | 0.45 |  |  |  | 0.02 |
| 3,320,100 |  |  |  | 3,320,000 |  |  | January 26, 2026 |  |  | 0.39 |  |  |  | 0.40 |
| 495,000 |  |  |  | 495,000 |  |  | February 25, 2026 |  |  | 1.60 |  |  |  | 0.06 |
| 1,185,750 |  |  |  | 1,185,750 |  |  | September 29, 2026 |  |  | 0.91 |  |  |  | 0.20 |
| 998,794 |  |  |  | 998,794 |  |  | October 25, 2026 |  |  | 2.00 |  |  |  | 0.18 |
| 2,476,900 |  |  |  | 2,476,900 |  |  | January 20, 2027 |  |  | 2.40 |  |  |  | 0.49 |
| 3,683,277 |  |  |  | - |  |  | August 8, 2028 |  |  | 1.75 |  |  |  | 1.16 |
| 13,059,821 |  |  |  | 9,376,444 |  |  |  |  |  |  |  |  |  | 2.54 |

d) | DSU Plan

Effective December 2022, the Company approved a deferred share unit Plan (the “DSU Plan”) that enables the Company upon approval by the Board of Directors to grant DSUs to eligible non-management directors. The DSU Plan and the grants thereunder were subsequently approved and ratified by shareholders of the Company on September 20, 2023. The DSUs credited to the account of a director may only be redeemed following the date upon which the holder ceases to be a director. Depending upon the country of residence of a director, the DSUs may be redeemed at any time prior to December 15 in the calendar year following the year in which the holder ceases to be a director and may be redeemed in as many as four installments. Upon redemption, the holder is entitled to a cash payment equal to the number of units redeemed multiplied by the five-day volume weighted average price of the Common Shares on that date. The Company may elect, in its sole discretion, to settle the value of the DSUs redeemed in Common Shares on a one-for-one basis, provided shareholder approval has been obtained on or prior to the relevant redemption date.

During the six months ended June 30, 2024, DSUs were granted as follows:

SCHEDULE OF DSU GRANTED

|  | Number Outstanding |  |  | Market Price (1) ($) |  |  | Fair Value ($) |
DSUs outstanding at December 31, 2023 |  |  | 730,975 |  |  |  | 1.21 |  |  |  | 884,481 |
DSUs granted during the period |  |  | 662,701 |  |  |  | 0.85 |  |  |  | 564,913 |
Fair value adjustment |  |  | - |  |  |  |  |  |  |  | (320,516 | )
DSUs outstanding at June 30, 2024 |  |  | 1,393,676 |  |  |  | 0.81 |  |  |  | 1,128,878 |

(1) | Under the DSU Plan, Market Price is the volume weighted average price on the TSXV for the last five trading days immediately preceding the grant date.

| 25 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

During the six months ended June 30, 2024, the DSU compensation was $244,397 net of fair value adjustment and was recorded as share based compensation (Q2 2023 - $306,405).

The DSUs were classified as a derivative financial liability that should be measured at fair value, with changes in value recorded in profit or loss. The fair value of the DSUs was determined by the volume weighted average price on the TSXV for the last five trading days of each reporting period. As at June 30, 2024, the Company reassessed the fair value of the DSUs at $1,128,878 and recorded the amount as a DSUs liability (December 31, 2023 - $884,481).

12. RELATED PARTY TRANSACTIONS

The following amounts due to related parties are included in trade payables and accrued liabilities (Note 6).

SCHEDULE OF RELATED PARTY TRANSACTIONS

|  | June 30, 2024 $ |  |  | December 31, 2023 $ |
Directors and officers of the Company |  |  | 169,667 |  |  |  | 93,795 |
Other liabilities, current |  |  | 169,667 |  |  |  | 93,795 |

These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.

(a) | Related party transactions

As a result of the 2023 Financing Transactions on June 28, 2023 and December 14, 2023, Cymbria and certain other funds managed by EdgePoint (the “Financing Parties”) acquired a total of 16,037,800 Common Shares, representing approximately 10.7% of the Company’s issued and outstanding Common Shares. The Financing Parties also acquired on closing of the Financing Transactions an aggregate of 6,024,000 warrants with an expiration date of June 28, 2026 and an exercise price of $1.4375 which, if exercised, together with the Common Shares acquired at closing would result in the Financing Parties holding approximately 14.2% of the Common Shares in the aggregate (calculated on a partially-diluted basis). As a result of the closing of the 2023 Financing Transactions, the Financing Parties became related parties of PNRL.

During the six months ended June 30, 2024, the Company paid interest of $1,038,412 to the Financing Parties (June 30, 2023 – Nil).

In connection with the June 2024 Financing, EdgePoint subscribed for 7,692,307 Units at $0.78 per Unit for gross proceeds of approximately $6 million. As of June 30, 2024, EdgePoint beneficially owns 23,833,224 Common Shares and 13,716,307 Warrants, representing approximately 12.8% of the issued and outstanding Common Shares (approximately 18.8% on a partially diluted basis assuming the exercise of all warrants held by EdgePoint). Notwithstanding the foregoing, all warrants issued to EdgePoint as part of the June 2024 Financing include customary restrictions providing that EdgePoint will not exercise such number of warrants so as to bring its undiluted share ownership percentage above 20.0% of the Company’s issued and outstanding Common Shares without obtaining the requisite shareholder and TSXV approval.

In connection with the June 2024 Financing, certain insiders of the Company subscribed for an aggregate of 1,389,140 Units for gross proceeds of $933,530.

| 26 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

(b) | Key management personnel is defined as members of the Board of Directors and senior officers.

Key management compensation was related to the following:

|  | June 30, 2024 $ |  |  | June 30, 2023 $ |
Management fees |  |  | 1,569,500 |  |  |  | 1,630,663 |
Corporate and administration expenses |  |  | 200,000 |  |  |  | 121,182 |
Key management compensation |  |  | 1,769,500 |  |  |  | 1,751,845 |

13. 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, market risk and currency risk. The carrying value of cash and cash equivalents and trade payables and accrued liabilities approximate their fair value due to their short-term nature. Such fair value estimates are not necessarily indicative of the amounts the Company might pay or receive in actual market transactions. The fair value of the DSUs is the closing price of the Company’s Common Shares at the end of each reporting period. 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 June 30, 2024 and December 31, 2023, the fair value of cash and cash equivalents and DSUs is based on Level 1 measurements.

14. RISK MANAGEMENT

The Company’s exposure to market risk includes, but is not limited to, the following risks:

Interest Rate Risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not subject to significant changes in interest rates.

Foreign Currency Exchange Rate Risk

Currency risk is risk that the fair value of future cash flows will fluctuate because of changes in foreign currency exchange rates. In addition, the value of cash and other financial assets and liabilities denominated in foreign currencies can fluctuate with changes in currency exchange rates.

The Company primarily operates in Canada, Barbados 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 rate risks are managed by matching levels of foreign currency balances and related obligations and by maintaining operating cash accounts in non-Canadian dollar currencies.

| 27 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below. The amount shown are those reported and translated into CAD at the closing rate.

SCHEDULE OF RISK MANAGEMENT

|  | Short-term exposure |  |  | Long-term exposure |
|  | USD $ |  |  | BWP $ |  |  | BWP $ |
June 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  | 3,009,264 |  |  |  | 9,599,663 |  |  |  | 63,088,957 |
Financial liabilities |  |  | (1,696,671 | ) |  |  | (1,935,517 | ) |  |  | (961,138 | )
Total exposure |  |  | 1,312,593 |  |  |  | 7,664,146 |  |  |  | 62,127,819 |

|  | Short-term exposure |  |  | Long-term exposure |
|  | USD $ |  |  | BWP $ |  |  | BWP $ |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  | 2,576,180 |  |  |  | 755,386 |  |  |  | 54,082,922 |
Financial liabilities |  |  | (501,458 | ) |  |  | (4,851,201 | ) |  |  | (3,508,714 | )
Total exposure |  |  | 2,074,722 |  |  |  | (4,095,815 | ) |  |  | 50,574,208 |

The following table illustrates the sensitivity of net loss in relation to the Company’s financial assets and financial liabilities and the USD/CAD exchange rate and BWP/CAD exchange rate, all other things being equal. It assumes a +/- 5% change of the USD/CAD and BWP/CAD exchange rates for the six months ended June 30, 2024 and the year ended December 31, 2023, respectively.

If the CAD strengthened against the USD and BWP by 5%, respectively (December 31, 2023 – 5 %), it would have had the following impact:

SENSITIVITY ANALYSIS FOR EFFECT OF FOREIGN CURRENCY CHANGES

|  | Short-term exposure |  |  | Long-term exposure |
|  | USD $ |  |  | BWP $ |  |  | Total $ |  |  | BWP $ |
June 30, 2024 |  |  | 65,630 |  |  |  | 383,207 |  |  |  | 448,837 |  |  |  | 3,106,391 |
December 31, 2023 |  |  | 103,736 |  |  |  | (204,791 | ) |  |  | (101,055 | ) |  |  | 2,528,710 |

If the CAD weakened against the USD and BWP by 5%, respectively (December 31, 2023 – 5 %), it would have had the following impact:

|  | Short-term exposure |  |  | Long-term exposure |
|  | USD $ |  |  | BWP $ |  |  | Total $ |  |  | BWP $ |
June 30, 2024 |  |  | (65,630 | ) |  |  | (383,207 | ) |  |  | (448,837 | ) |  |  | (3,106,391 | )
December 31, 2023 |  |  | (103,736 | ) |  |  | 204,791 |  |  |  | 101,055 |  |  |  | (2,528,710 | )

The higher foreign currency exchange rate sensitivity in profit at June 30, 2024 compared with December 31, 2023 is attributable to increased balances in financial assets and liabilities and fluctuations in foreign exchange rates, BWP and USD in relation to CAD.

| 28 |

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(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.

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 June 30, 2024:

SCHEDULE OF CONTRACTUAL OBLIGATIONS

|  | Less than 1 year $ |  |  | 1 - 2 years $ |  |  | 2 - 5 years $ |  |  | Total $ |
Trade payables and accrued liabilities |  |  | 3,954,337 |  |  |  | - |  |  |  | - |  |  |  | 3,954,337 |
Vehicle financing |  |  | 74,723 |  |  |  | 95,054 |  |  |  | 21,176 |  |  |  | 190,953 |
Term Loan |  |  | 2,088,235 |  |  |  | 22,970,588 |  |  |  | - |  |  |  | 25,058,823 |
Lease liabilities |  |  | 1,306,906 |  |  |  | - |  |  |  | - |  |  |  | 1,306,906 |
|  |  | 7,424,201 |  |  |  | 23,065,642 |  |  |  | 21,176 |  |  |  | 30,511,019 |

DSUs liability and provision for leave and severance are not presented in the above liquidity analysis as management considers it is not practical to allocate the amounts into maturity groupings.

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 raises and debt funding from related or other parties. In doing so, the Company may issue new shares, restructure or issue new debt.

The Company is not subject to any externally imposed capital requirements imposed by a regulator or a lending institution.

In the management of capital, the Company includes the components of equity and debt (vehicle financing, lease liabilities and Term Loan), net of cash.

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Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

SCHEDULE OF CAPITAL RISK MANAGEMENT

|  | June 30, 2024 $ |  |  | December 31, 2023 $ |
Shareholder’s equity (deficit) |  |  | 18,665,572 |  |  |  | 9,745,686 |
Vehicle financing |  |  | 190,953 |  |  |  | 236,124 |
Lease liabilities |  |  | 1,306,906 |  |  |  | 1,611,143 |
Term Loan |  |  | 18,448,467 |  |  |  | 17,956,423 |
Capital Gross Amount |  |  | 38,611,898 |  |  |  | 29,549,376 |
Cash |  |  | (28,081,517 | ) |  |  | (19,245,628 | )
Capital Net of Cash |  |  | 10,530,381 |  |  |  | 10,303,748 |

15. SEGMENTED INFORMATION

The Company operates in one reportable operating segment being that of the acquisition, exploration and evaluation of mineral properties in three geographic segments being Botswana, Barbados and Canada. The Company’s geographic segments are as follows:

SCHEDULE OF INFORMATION ABOUT COMPANY'S GEOGRAPHIC SEGMENTS

|  | June 30, 2024 $ |  |  | December 31, 2023 $ |
Current assets |  |  |  |  |  |  |  |
Canada |  |  | 25,676,501 |  |  |  | 15,894,177 |
Barbados |  |  | 2,936,962 |  |  |  | 104,024 |
Botswana |  |  | 2,240,469 |  |  |  | 4,892,707 |
Total |  |  | 30,853,932 |  |  |  | 20,890,908 |
Current assets |  |  | 30,853,932 |  |  |  | 20,890,908 |

|  | June 30, 2024 $ |  |  | December 31, 2023 $ |
Property, plant and equipment |  |  |  |  |  |  |  |
Canada |  |  | 7,876 |  |  |  | 8,726 |
Botswana |  |  | 7,973,281 |  |  |  | 8,479,773 |
Total |  |  | 7,981,157 |  |  |  | 8,488,499 |
Property, plant and equipment |  |  | 7,981,157 |  |  |  | 8,488,499 |

|  | June 30, 2024 $ |  |  | December 31, 2023 $ |
Exploration and evaluation assets |  |  |  |  |  |  |  |
Botswana |  |  | 8,699,085 |  |  |  | 8,594,798 |
Exploration and evaluation assets |  |  | 8,699,085 |  |  |  | 8,594,798 |

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Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

16. CONTINGENT LIABILITIES

There are no environmental liabilities associated with the Selebi Assets and the Selkirk Assets as at the acquisition dates as all liabilities prior to the acquisitions are the responsibility of the sellers, BCL and TNMC, respectively. The Company has an obligation for the rehabilitation costs arising subsequent to the acquisitions. As of June 30, 2024, management is not aware of or anticipating any contingent liabilities that could impact the financial position or performance of the Company related to its exploration and evaluation assets.

The Company’s exploration and evaluation assets are affected by the laws and environmental regulations that exist in the various jurisdictions in which the Company operates. It is not possible to estimate the future contingent liabilities and the impact on the Company’s operating results due to future changes in Company’s exploration and development of its projects or future changes in such laws and environmental regulations.

17. GENERAL AND ADMINISTRATIVE EXPENSES

Details of the general and administrative expenses are presented in the following table:

GENERAL AND ADMINISTRATIVE EXPENSES

|  | June 30, 2024 $ |  |  | June 30, 2023 $ |
Advisory and consultancy |  |  | 47,337 |  |  |  | 441,559 |
Consulting fees |  |  | 130,649 |  |  |  | 145,325 |
Filing fees |  |  | 270,702 |  |  |  | 231,551 |
General office expenses |  |  | 724,180 |  |  |  | 556,623 |
Insurance |  |  | 328,675 |  |  |  | 381,013 |
Investor relationships |  |  | 287,217 |  |  |  | 285,362 |
Management fee |  |  | 1,569,500 |  |  |  | 1,630,663 |
Professional fees |  |  | 615,524 |  |  |  | 642,689 |
Salaries and benefits |  |  | 369,025 |  |  |  | - |
Total |  |  | 4,342,809 |  |  |  | 4,314,785 |

18. SPARE PARTS

Details of the movements in relation to spare parts are presented in the following table:

SCHEDULE OF THE MOVEMENTS IN RELATION TO SPARE PARTS

|  | June 30, 2024 $ |  |  | December 31, 2023 $ |
Spare parts, beginning of the period |  |  | 212,135 |  |  |  | - |
Additions |  |  | 1,091,044 |  |  |  | 212,135 |
Utilization |  |  | (98,733 | ) |  |  | - |
Spare parts, end of the period |  |  | 1,204,446 |  |  |  | 212,135 |

Spare parts relate to spares to drilling equipment and underground equipment located at the mines in Botswana which are critical for the continued operations of the mines in the event that certain components become worn or inoperable. Spare parts are held in reserve at the mine site and consumed when placed into service.

19. SUBSEQUENT EVENTS

On August 14, 2024, the Company granted to certain directors, officers, employees and/or consultants of the Company and/or its subsidiaries an aggregate of 3,110,000 stock options of the Company pursuant to the stock option plan of the Company. The options have an exercise price of $1.10 per share and a five-year term from the date of grant, and vest annually in equal thirds beginning on the date of grant.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report. This discussion and analysis below includes forward-looking statements that are subject to risks, uncertainties and other factors described in the “Risk Factors” section set forth in the 2023 Form 10-K that could cause actual results to differ materially from those anticipated in these forward-looking statements as a result of various factors. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. We caution you to read the “Cautionary Note Regarding Forward-Looking Statements” section of this Report.

The following management’s discussion and analysis (this “MD&A”) should be read in conjunction with the unaudited condensed interim consolidated financial statements of the Company and accompanying notes thereto for the quarters ended June 30, 2024 and 2023 (the “Quarterly Financial Statements”). This MD&A is intended to assist the reader to assess material changes in the financial condition of the Company during the quarter ended June 30, 2024, and the results of operations of the Company for the three-month and six-month periods ended June 30, 2024 and June 30, 2023. The Quarterly Financial Statements and the financial information contained in this MD&A were prepared in accordance with US GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission.

In this MD&A, unless the context otherwise requires, references to the Company or PNRL refer to Premium Nickel Resources Ltd. and its consolidated subsidiaries. All monetary amounts in the discussion are expressed in Canadian dollars unless otherwise indicated.

This MD&A contains forward-looking information within the meaning of applicable securities laws. All forward-looking information, including information not specifically identified herein, is made subject to cautionary language in this MD&A. Readers are cautioned to refer to the disclosure in this Report under the heading “Cautionary Note Regarding Forward-Looking Statements” when reading any forward-looking information.

Company Overview

PNRL is a mineral exploration company focused on the discovery and advancement of high-quality nickel-copper-cobalt-platinum group metals (“Ni-Cu-Co-PGM”) resources. The principal assets of the Company are the Selebi and Selebi North nickel-copper-cobalt (“Ni-Cu-Co”) mines (together, the “Selebi Mines”) in Botswana and related infrastructure (together, the “Selebi Assets”), as well as the nickel, copper, cobalt, platinum-group elements (“Ni-Cu-Co-PGE”) Selkirk mine (the “Selkirk Mine”) in Botswana, together with associated infrastructure and four surrounding prospecting licenses (collectively, the “Selkirk Assets”).

PNRL’s global strategy is to identify the best Ni-Cu-Co-PGM projects and to acquire or invest in opportunities that have high prospectivity in mining friendly jurisdictions located in low-risk countries with rule-of-law, supportive foreign investment and resource acts. PNRL sources projects that fit a strict standard that comply with the Company’s values and principles which stand up against the highest acceptable industry standards. PNRL is committed to governance through transparency, accountability, and open communication within PNRL’s team and stakeholders.

The Company’s principal business activity is the exploration and evaluation of PNRL’s flagship asset, the Selebi Mines and, separately, the Company’s Selkirk Mine, each located Botswana.

The Selebi Mines and the Selkirk Mine are permitted with 10-year mining licences and benefit from significant local infrastructure. The Company’s flagship Selebi Mines includes two operational shafts, the Selebi and Selebi North shafts, and related infrastructure such as rail, power and roads.

PNRL is headquartered in Toronto, Ontario, Canada and is publicly traded on the TSX Venture Exchange under the symbol “PNRL”.

Summary of Activities

In 2023, PNRL commenced its Phase 2 drill program undertaking a combination of resource and continued exploration drilling at the Selebi Mines to demonstrate the size potential of the Selebi Mines mineral system, with the aim of establishing an initial mineral resource estimate (the “Initial MRE”) on the Selebi Mines that will serve as the basis for future engineering studies. The resource drilling at the Selebi Mines commenced underground from the Selebi North infrastructure in August 2023 and is currently ongoing with three drills turning. Assay results for completed holes are released as they are received and confirmed by the Company. The Company sees significant potential for expanding the 2016 historic estimate.

The Company reported results of the Initial MRE on August 8, 2024 for the Selebi Mines in accordance with Canadian standards. The Initial MRE reflects a significant expansion of the 2016 historic estimate. During the second quarter and up to August 13, the Company has drilled approximately 18,982 metres in 39 holes at Selebi North, which have not been accounted for in the Initial MRE and for which assays are still pending, or recently received and pending imminent disclosure.

PNRL plans to continue its work at the Selkirk Mine and its surrounding prospecting licences, which is the Company’s second asset in Botswana, located approximately 75 kilometres north of the Selebi Mines. The focus of this work will be to understand the legacy work done by previous owners, which had advanced the Selkirk Mine to a bankable feasibility study for re-development as an open pit mine.

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The Company plans to include drilling, geoscience and metallurgical work to support a MRE in respect of the Selkirk Mine, anticipated to be delivered in Q4 2024. In 2023, the Company completed test work to evaluate an alternative ore processing and tailings management strategy to those used in previous economic studies, the results of which are set forth in the Selkirk Technical Report (as defined herein).

For more information relating to the exploration and evaluation activities conducted on the Selebi Mines and Selkirk Mine, please see “Exploration and Evaluation Activities” below.

Highlights and Key Developments to date in 2024:

| ● | On January 1, 2024, James Gowans was appointed as the Chair of the Board of Directors.
| ● | The Company continued its Phase 2 Selebi North drilling program, which commenced August 9, 2023. In aggregate, the Company has drilled a total of 35,246 metres in 92 drill holes, at the time of the May 16, 2024 press release.
| ● | Since January 1, 2024, the Company reported assay results from a total of 33 drill holes, pursuant to press releases from January 18 to June 26, 2024, see the table under “Selebi Mines, Botswana - Exploration Activities”, all of which are available on the Company’s website www.premiumnickel.com. The Company’s website is not incorporated in this Report.

Assay results included:

| ● | 15.30 metres of 2.96% NiEqa reported January 18, 2024;
| ● | 30.45 metres of 2.88% NiEq and 9.55m of 3.94% NiEq reported on January 30, 2024;
| ● | 102.80 metres of 2.23% NiEq reported on February 13, 2024;
| ● | 110.75 metres of 2.56% NiEq reported on February 26, 2024;
| ● | 17.55 metres of 3.28% NiEq reported on May 16, 2024; and
| ● | 52.45 metres of 2.02% NiEq and 35.60 metres of 2.45% NiEq on June 26, 2024.

| ● | On June 14 and June 21, 2024, the Company closed two tranches of a non-brokered private placement offering of units of the Company (the “Units”). pursuant to which the Company issued a total of 35,256,409 Units at a price of $0.78 per Unit for gross proceeds of approximately $27.5 million (the “June Financing”). For a more detailed summary of the June Financing, see “Liquidity — Financings”.
| ● | On June 24, 2024, Norman MacDonald was appointed to the Board of Directors.
| ● | On August 8, 2024, PNRL announced its Initial MRE for the Selebi Mines, which mineral resource estimate was prepared in accordance with Canadian requirements.

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Exploration and Evaluation Activities

The following table outlines the key milestones, estimated timing and costs of each of the Company’s material projects, the Selebi Mines and the Selkirk Mine, based on the Company’s reasonable expectations and intended courses of action and current assumptions and judgement, with information based as of June 30, 2024.

Key Milestones for Project |  | Expected Timing of Completion |  | Anticipated Remaining Costs(1) |
Selebi Mines(2) |  |  |  |  |  |
Ongoing drilling and assays(3) |  | Ongoing, costs to September 2024 |  | $ | 1,140,000 |
Care and maintenance costs |  | Ongoing costs to September 2024 |  | $ | 600,000 |
Engineering and development |  | Ongoing costs to September 2024 |  | $ | 910,000 |
MRE for Selebi Mines(4) |  | September 2024 |  | $ | 40,000 |
Selkirk Mine(5) |  |  |  |  |  |
Geology & Geophysics |  | Ongoing costs to September 2024 |  | $ | 10,000 |
MRE for Selkirk Mine |  | Ongoing costs to September 2024 |  | $ | 300,000 |

Notes:

| (1) | June 30, 2024.
| (2) | The key milestones are to take the Selebi Mines to an updated MRE, which would mark the completion of the Phase I work program as envisioned in the Selebi Technical Report (defined below) and to commence Phase 2 which will gear towards a preliminary economic assessment for the project. Please refer to the Selebi Technical Report, including the recommendations provided therein, for more details.
| (3) | The Company has completed the exploration and infill drilling (15,074 metres) as contemplated in Phase 1 of the work program in the Selebi Technical Report. This constitutes a Phase 2 drilling program, with the additional drilling and assays required to advance the Selebi Mines toward a current MRE. For more details, see “Selebi Mines, Botswana – Exploration Activities”.
| (4) | Total costs relating to an MRE for the Selebi Mines are approximately $150,000. Approximately $110,000 has been spent as at June 30, 2024. This represents the additional expected costs to complete an MRE for the project.
| (5) | The Company will be focusing its exploration and evaluation activities on the Selebi Mines until an updated MRE is completed for the Selebi project. Expenditures contemplated for the Selkirk Mine are minimal and contingent on additional financing. The contemplated geology and geophysics work represented here is a portion of the geology and geophysics work program outlined in the Selkirk Technical Report which is required to advance the project towards an MRE and meet exploration commitments on the prospecting licences. The costs for the MRE are data verification costs that include a resampling program.

Readers are cautioned that the above represents the opinions, assumptions and estimates of management considered reasonable at the date the statements are made and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those described above.

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Mineral Properties

The information relating to the Selebi Mines is derived from, and in some instances is an extract from, the technical report summary entitled “Technical Report Summary on the Selebi Mines, Central District, Republic of Botswana” dated June 27, 2024 (with an effective date of May 31, 2024) prepared for the Company by SLR (as defined herein) (the “Selebi Technical Report”), prepared in compliance with the SEC’s Modernization of Property Disclosures for Mining Registrants set forth in subpart 1300 of Regulation S-K (the “SEC Mining Rules”).

The information relating to the Selkirk Mine is derived from, and in some instances is an extract from, the technical report summary entitled “Technical Report Summary on the Selkirk Nickel Project, North East District, Republic of Botswana” dated June 27, 2024 (with an effective date of May 31, 2024) prepared for the Company by SLR (the “Selkirk Technical Report”), prepared in compliance with the SEC Mining Rules.

Selebi Mines, Botswana

The Selebi Mines are located in Botswana approximately 150 km southeast of the city of Francistown, and 410 km northeast of the national capital Gaborone. The Selebi Mines are readily accessed via paved and gravel roads from the town of Selebi-Phikwe, located just north of the mining licence. With a population of approximately 52,000, the town is accessed via a well-maintained paved road that branches due east from the major A1 highway at the town of Serule, 57 km from the Selebi Mines.

The Selebi Mines infrastructure includes two mines, currently on care and maintenance, Selebi (#2 Shaft) and Selebi North (#4 Shaft), and associated surface infrastructure.

The Selebi Mines consists of a single mining licence covering an area of 11,504 hectares. The mining licence is centred approximately at 22°03’00”S and 27°47’00”E.

Mining licence 2022/1L was granted to Premium Nickel Resources Proprietary Limited, a wholly-owned subsidiary of PNRL in Botswana, on January 31, 2022 over the Selebi Mines deposits discovered under mining licence 4/72. The original licence which had been granted to BCL Limited (“BCL”) on March 7, 1972, covered both Selebi and Phikwe project areas, was amended several times and renewed once, and was set to expire on March 6, 2022. The new mining licence is limited to the Selebi and Selebi North deposits and their surrounding areas and expires May 26, 2032.

Exploration

Exploration work completed at the Selebi Mines from 2021 to August 2024 consisted of the sourcing and digitization of existing historical information, confirming collar and down hole location information of selected historical holes, and drilling. PNRL also completed gyro, electromagnetic surveys (“BHEM”), televiewer, and downhole physical property surveys on selected high priority historical and recent exploration holes. A focused structural model over a portion of the Selebi deposit was developed by SRK Consulting Ltd. (“SRK”), and a 3D model of mineralization for use in targeting was created at Selebi North by SLR.

Early due diligence work in 2019 highlighted an off-hole BHEM anomaly in a 2010 drill hole located down-plunge of the Selebi deposit. The collection of new gyro data confirmed that the off-hole anomaly lies at the downdip edge of the modelled Selebi mineralization which was intersected by a drill hole which reported an estimated true thickness interval of 38.5m averaging 1.58% Ni and 2.44% Cu, including 21.4m of 2.34% Ni and 3.39% Cu. This drill hole intersection is located approximately 300m down plunge of the existing mine workings and approximately 1,200m below surface and provides support to the potential establishment of mineral resources at depth at the Selebi deposit.

Selebi North mineralization is also open at depth, and additional potential to establish mineral resources occurs there. Given the basin structure, it is possible that the Selebi North mineralization extends at depth and flattens to the south, while also potentially extending southward.

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In August 2023, an underground drilling program at Selebi North was initiated, and is currently active with three drills turning. As of August 13, 2024, a total of 49,271 metres has been completed in 121 holes, with 3 of those holes currently in progress. The core is sampled and sent to ALS Chemex in Johannesburg for analysis. Assay results are reported as they are received. All holes are surveyed with a gyro instrument and selected holes are surveyed with borehole EM. To date, a total of 35 underground holes have been surveyed. On August 8, the Company published summary results for the Initial MRE prepared in accordance with Canadian standards at the Selebi Mines.

Mineral Processing and Metallurgical Testing

The historical BCL operations consisted of an integrated mining, concentrating and smelting complex which operated for over 40 years over the Selebi Phikwe project area. The smelter processed Selebi and Phikwe concentrates and toll treated nickel concentrates received from the Nkomati Nickel Mine and the Phoenix Mine. The concentrator plant and smelter were placed on care and maintenance in 2016 and are located adjacent to the Selebi Mines at the historical Phikwe Mine.

PNRL intends to use pre-concentration methods to separate the minerals from waste materials to produce a mill feed and flotation to produce a concentrate for commercial sale, or for further refining, and does not plan to restart the existing concentrator or smelter. Concentrate options will be investigated in the next phase of work and include a bulk concentrate and separate nickel and copper concentrates. In 2021, PNRL carried out due diligence work that included metallurgical sampling and testing. Metallurgical study programs were carried out by SGS Canada Inc. (“SGS”) in Lakefield, Ontario in 2021 and 2023 for separate copper and nickel concentrate production at a conceptual level. The conceptual process flowsheet developed by SGS includes the key unit operations of crushing, grinding, and flotation.

PNRL and DRA collaborated in the analyses of historical data collected on key flotation parameters observed in the production of separate nickel and copper concentrates, such as metal upgrade ratios and mass pull, to simulate estimated metal grades and recoveries for bulk concentrate.

Selkirk Mine, Botswana

The Selkirk Mine is located in the northeast of Botswana approximately 28 km southeast of the city of Francistown, and 450 km northeast of the national capital Gaborone.

The Selkirk Mine is accessed year-round via paved and gravel roads from Gaborone and Francistown. The Selkirk Mine infrastructure includes relict surface infrastructure supporting the historical underground mine, and the original decline. The Selkirk Mine is quite flat, and beyond the mine footprint is covered in grassland with dispersed and clustered trees typical of a tree savanna biome.

The Selkirk Mine consists of a single mining licence covering an area of 1,458 hectares (14.58 km2) and four prospecting licences covering a total of 12,670 hectares (126.7 km2). The mining licence, 2022/7L, is centred approximately at 21°19’13” S and 27°44’17” E and is held by PNGPL, a subsidiary of PNRL. The mining licence was renewed for ten years commencing on May 27, 2022, ending on May 26, 2032. The four prospecting licences (PL050/2010, PL051/2010, PL210/2010, and PL071/2011) are valid for a period of two years effective from October 1, 2022.

Exploration

Exploration work completed by PNRL to date has consisted of the sourcing and digitization of existing historical information, confirming collar location information on selected historical holes, re-logging selected drill core, sampling mineralized drill core found untouched on surface, and submitting a number of samples for proof-of-concept metallurgical testing. PNRL has engaged SLR to complete a MRE. Following the data verification exercise, the Company has resampled core from 14 holes with the intention of reporting an updated MRE at the Selkirk Mine in the future. Exploration programs have also been ongoing at the Prospecting Licences located adjacent to the Selkirk Mining Licence, with a differential Global Positioning System of seven historical drillhole collars and two surface electromagnetics surveys completed in Q2 2024.

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Mineral Processing and Metallurgical Testing

PNRL intends to use flotation to produce a concentrate for commercial sale or for further refining. Concentrate options will be investigated in the next phase of work and include a bulk concentrate and separate nickel and copper concentrates. Metallurgical study programs were carried out by SGS in Lakefield, Ontario in 2021 and 2023 for separate copper and nickel concentrate production at a conceptual level. The conceptual process flowsheet developed by SGS includes the key unit operations of crushing, grinding, and flotation.

PNRL analyzed select SGS test results on key flotation parameters observed in the production of separate nickel and copper concentrates to simulate estimated metal grades and recoveries for bulk concentrate. The area is in a rural district and the available infrastructure is minimal. Strategic services (e.g., electricity and water supplies) could be provided by the Botswana Power Corporation and from existing governmental water pipelines within the Francistown Road Reserve, and potable water could be sourced on site from boreholes. A railway line crosses the western margin of the Selkirk area.

Maniitsoq Nickel-Copper-PGM Project, Southwest Greenland

The Maniitsoq project is centred on the 75 kilometre by 15 kilometre Greenland Norite Belt which hosts numerous high-grade nickel-copper sulphide occurrences associated with mafic and ultramafic intrusions. The property is located 100 kilometres north of Nuuk, the capital of Greenland, and is accessible year-round either by helicopter or by boat from Nuuk or Maniitsoq, the latter located on the coast approximately 15 kilometres to the west. The Company acquired the Maniitsoq project in 2011 due to its potential for the discovery of significant magmatic sulfide deposits in a camp-scale belt. The Maniitsoq property consists of three exploration licences, Sulussagut No. 2011/54 and Ininngui No. 2012/28 comprising 2,689 and 296 square kilometres, respectively, and the Carbonatite property No. 2018/21 (63 square kilometres), and a prospecting licence, No. 2020/05, for West Greenland. The Greenland properties have no mineral resources or reserves.

The three mineral exploration licences (“MEL”), 2011/54, 2012/28 and 2018/21, had sufficient accrued work credits to keep the property in good standing until December 2023, at which time a reduction in the size of 2011/54 and 2012/28 was required. An application for the renewal and reduction of MEL 2012/28 was approved and the licence area has been reduced and renewed to December 31, 2026. The reduction of MEL 2012/28 from 265 km2 to 110.9 km2 has no material impact on potential for discovery of an economic deposit as all known mineral prospects are retained. The application for the reduction of 2011/54 from 2,747 km2 to 2,182 km2 was submitted and approved by the Greenland authority. This reduction has no material impact as all of the high priority mineral occurrences are retained. MEL2011/54 expires in December 31, 2025. MEL 2018/21 and prospecting licence 2020/05 are in effect until December 31, 2024.

Exploration Activities

No exploration work was carried out in Greenland in 2023 or to date in 2024. Remaining targets were reviewed and prioritized in preparation for a potential field program in 2023, which was deferred. A quote was received in Q2 2023 for computer assisted target generation.

During the six months ended June 30, 2024, the Company incurred $69,610 in site administration on the Maniitsoq property, which is comprised of the Sulussugut, Ininngui, Carbonatite and 2020/05 licences. These expenditures were recorded as general exploration expense in the consolidated statements of comprehensive loss. No material expenditures or activities are contemplated on the Maniitsoq property at this time.

Canadian Nickel Projects - Sudbury, Ontario

Po st Creek Property

The Post Creek property is located 35 kilometres east of Sudbury in Norman, Parkin, Alymer and Rathburn townships and consists of 73 unpatented mining claim cells in two separate blocks, covering a total area of 912 hectares held by the Company. The Company acquired the property through an option agreement in April 2010, which was subsequently amended in March 2013. As at the date of this MD&A, the Company holds a 100% interest in the Post Creek property and is obligated to pay advances on a net smelter return of $10,000 per annum, which will be deducted from any payments to be made under the net smelter return.

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The Post Creek property lies adjacent to the Whistle Offset Dyke Structure which hosts the past–producing Whistle Offset and Podolsky Cu-Ni-PGM mines. Post Creek lies along an interpreted northeast extension of the corridor containing the Whistle Offset Dyke and Footwall deposits and accounts for a significant portion of all ore mined in the Sudbury nickel district and, as such, represents favourable exploration targets. Key lithologies are Quartz Diorite and metabreccia related to offset dykes and Sudbury Breccia associated with Footwall rocks of the Sudbury Igneous Complex which both represent potential controls on mineralization.

No exploration work was completed to date in 2024 on the Post Creek Property. The claims have sufficient work credits to keep them in good standing until 2025. No material expenditures or activities are contemplated on the Post Creek property at this time.

Halcyon Property

The Halcyon property is located 35 kilometres northeast of Sudbury in the Parkin and Aylmer townships and consists of 63 unpatented mining cells for a total of 864 hectares. Halcyon is adjacent to the Post Creek property and is approximately 2 kilometres north of the producing Podolsky Mine of FNX Mining. The property was acquired through an option agreement and as at the date of this MD&A, the Company holds a 100% interest in the Halcyon property and is obligated to pay advances on a net smelter return of $8,000 per annum, which will be deducted from any payments to be made under the net smelter return.

No exploration work was completed on the Halcyon Property to date in 2024. The claims are in good standing through 2025. No material expenditures or activities are contemplated on the Halcyon property at this time.

During the six months ended June 30, 2024, the Company incurred $26,106 in site administration costs related to the Post Creek and, Halcyon properties.

Quetico Property

The Quetico property is located within the Thunder Bay Mining District of Ontario and consists of 99 claim cells in two blocks. Cells were acquired to assess: (a) the Quetico Sub-province corridor, which hosts intrusions with Ni-Cu-Co-PGM mineralization related to a late 2690 Ma Archean magmatic event; and (b) the Neoproterozoic (1100 Ma MCR) magmatic event and related intrusions.

No work was carried out on the Quetico property to date in 2024. The last remaining claims expired on April 26, 2024.

Financial Capability

The Company is an exploration stage entity and has not yet achieved commercial production on any of its properties or profitable operations. The business of the Company entails significant risks. The recoverability of amounts shown for mineral property costs is dependent upon several factors including environmental risk, legal and political risk, the establishment of economically recoverable mineral reserves, confirmation of the Company’s interests in the underlying mineral claims, the ability of the Company to obtain necessary financing to complete exploration and advancement of its mineral assets and the ability of the Company to attain sufficient net cash flow from future profitable production or disposition proceeds.

As at June 30, 2024, the Company had working capital of $ 25,273,813 (FY 2023 – $14,999,619) and reported an accumulated deficit of $123,707,188 (FY 2023 – $104,566,816).

As at June 30, 2024, the Company had $ 28,081,517 in available cash (FY 2023 – $19,245,628). There are no sources of operating cash flows. Given the Company’s current financial position and the ongoing exploration and evaluation expenditures, the Company will need to raise additional capital through the issuance of equity or other available financing alternatives to continue funding its operating, exploration and evaluation activities, and re-development of the mineral properties. Although the Company has been successful in its past fund-raising activities, there is no assurance as to the success of future fundraising efforts or as to the sufficiency of funds raised in the future.

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Selected Financial Information

The following amounts are derived from the Company’s unaudited condensed interim consolidated financial statements prepared under US GAAP.

|  | Six months ended June 30, |
In Canadian dollars, except number of shares issued and shares outstanding |  | 2024 |  |  | 2023 |
Net (loss) |  |  | (19,140,372 | ) |  |  | (14,514,679 | )
Basic (loss) per share |  |  | (0.12 | ) |  |  | (0.12 | )
Dividend declared |  |  | - |  |  |  | - |
Additional paid-in capital |  |  | 143,847,771 |  |  |  | 101,119,143 |
Common Shares outstanding |  |  | 185,708,588 |  |  |  | 135,730,527 |
Weighted average shares outstanding |  |  | 152,199,879 |  |  |  | 119,773,438 |
Total assets |  |  | 47,534,174 |  |  |  | 35,249,318 |
Investment in exploration and evaluation assets |  |  | 61,382,140 |  |  |  | 39,583,472 |
Current liabilities |  |  | 5,580,119 |  |  |  | 4,839,540 |
Non-current financial liabilities |  |  | 23,288,483 |  |  |  | 17,884,936 |

The net loss of $19,140,372 in Q2 2024 was higher by $4,625,693 compared to the same period in 2023 with a net loss of $14,514,679. The greater loss in Q2 2024 was largely due to increased exploration activities relating to the Botswana assets, the interest expense of the Term Loan and an increase in share-based payments.

Total Assets

Total assets as at June 30, 2024 increased by $12,284,856 from same 6-month period at the end of Q2 2023. The change is mainly attributable to an increase in cash and spare parts of $ 6,473,625 and $992,311, respectively, as well as an increase in property, plant and equipment of $3,858,824.

Investment in Exploration and Evaluation Assets

Investment in exploration and evaluation assets in Q2 2024 and Q2 2023 is related to the acquisition of the Selebi Mines and the Selkirk Mine, the cost of which were capitalized, and the exploration and evaluation activities, the costs of which were expensed as incurred as the assets are still in the exploration and pre-development stage. As at June 30, 2024, the recorded amount of investment in the Company’s exploration and evaluation assets, including capitalized and expensed, totaled $61,382,140 compared to $39,583,472 as at June 30, 2023. Principal factors contributing to this change were increased exploration and evaluation activities on the Botswana assets in Q2 2024 relative to Q2 2023.

Current and Non-Current Liabilities

Current liabilities as at June 30, 2024 increased by $740,579 from Q2 2023 due to an increase in trade payables and accrued liabilities. Non-current liabilities as at June 30, 2024 increased by $5,403,547 from Q2 2023 as a result of the additional principal amount of the Term Loan.

| 39 |

Overall Performance and Results of Operations

As at the date of this Report, the Company has not earned revenue nor proved the economic viability of its projects. The Company’s expenses are not subject to seasonal fluctuations or general trends other than factors affecting costs such as inflation and input prices. The Company’s expenses and cash requirements will fluctuate from period to period depending on the level of activity at the projects based on factors related to raising capital to fund expenditures. Comparisons of activity made between periods should be viewed with this in mind. The Company’s quarterly results may be affected by many factors such as timing of exploration activity, share-based payment costs, capital raised, marketing activities and other factors that affect the Company’s exploration, evaluation and re-development activities.

The following table summarizes the Company’s Statement of Comprehensive Loss for the three- and six-month periods ended June 30, 2024 and June 30, 2023.

|  | Three months ended |  |  | Six months ended |
|  | June 30, 2024 |  |  | June 30, 2023 |  |  | June 30, 2024 |  |  | June 30, 2023 |
EXPENSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
General and administration expenses |  |  | 2,390,873 |  |  |  | 2,457,373 |  |  |  | 4,342,809 |  |  |  | 4,314,785 |
Depreciation |  |  | 369,674 |  |  |  | 43,998 |  |  |  | 733,902 |  |  |  | 89,760 |
General exploration expenses |  |  | 5,547,764 |  |  |  | 4,906,504 |  |  |  | 11,279,762 |  |  |  | 8,922,345 |
Interest and bank charges |  |  | 8,340 |  |  |  | 46,798 |  |  |  | 16,274 |  |  |  | 96,737 |
Share-based payment |  |  | 389,612 |  |  |  | - |  |  |  | 779,224 |  |  |  | - |
DSUs granted |  |  | 283,664 |  |  |  | 174,946 |  |  |  | 564,913 |  |  |  | 322,405 |
Fair value movement of DSUs |  |  | (93,914 | ) |  |  | (25,833 | ) |  |  | (320,516 | ) |  |  | (16,000 | )
Net foreign exchange loss |  |  | 147,989 |  |  |  | 73,487 |  |  |  | 214,002 |  |  |  | 103,903 |
Operating loss |  |  | 9,044,002 |  |  |  | 7,677,273 |  |  |  | 17,610,370 |  |  |  | 13,833,935 |
Interest income |  |  | (21,155 | ) |  |  | (3,411 | ) |  |  | (453 | ) |  |  | (13,088 | )
Interest and financing cost |  |  | 770,345 |  |  |  | 473,045 |  |  |  | 1,530,455 |  |  |  | 693,832 |
NET LOSS FOR THE PERIOD |  |  | 9,793,192 |  |  |  | 8,146,907 |  |  |  | 19,140,372 |  |  |  | 14,514,679 |
OTHER COMPREHENSIVE LOSS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exchange differences on translation of foreign operations |  |  | (392,697 | ) |  |  | 447,538 |  |  |  | (255,460 | ) |  |  | 719,875 |
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD |  |  | 9,400,495 |  |  |  | 8,594,445 |  |  |  | 18,884,912 |  |  |  | 15,234,554 |

Three Months Ended June 30, 2024 and June 30, 2023

The Company incurred a net loss of $9,793,192 in Q2 2024, higher by $1,646,285 compared to a net loss of $8,146,907 for Q2 2023.

The higher net loss in Q2 2024 was due to higher expenditures in Q2 2024 compared to Q2 2023 as outlined below:

| ● | Depreciation expense of $369,674 in Q2 2024 was higher by $325, 676 compared to $43,998 in Q2 2023 due to an increase in property, plant and equipment towards the end of 2023 which started to depreciate in Q1 2024.
| ● | General exploration expenses of $5,547,764 during Q2 2024 were higher by $621,260 compared to $4,906,504 in Q2 2023. The exploration and evaluation expenditures on the Botswana assets were increased in Q2 2024 with increased activities at the operating sites during the quarter.
| ● | Share-based payment in Q2 2024 was $389,612 compared to nil in Q2 2023.

| 40 |

| ● | Deferred share unit (“DSU”) compensation (net of fair value movement) was $189,750 during Q2 2024 and was higher by $40,637 compared to $149,113 during Q2 2023. The total value of DSUs granted in Q2 2024 was higher than in Q2 2023, due to an increase in the number of directors on the Board of Directors, with the increase partially offset by the drop in the fair value of outstanding DSUs due to a decrease in the Company’s share price.
| ● | Foreign exchange loss totaled $147,989 in Q2 2024 and was higher by $74,502 compared to $73,487 in Q2 2023. The loss in Q2 2024 was due to an overall weakening of the Botswana Pula against the Canadian dollar and the Canadian dollar weakening against United States dollar.
| ● | Interest and financing costs were $770,345 in Q2 2024 and were higher by $297,300 compared to $473,045 in Q2 2023. The higher interest costs related to the Term Loan as well as the interest charged on the lease liabilities associated with the acquisition of the Syringa Lodge and the purchase of drilling equipment.

The higher loss in Q2 2024 was partially offset by the lower general and administrative expenses in Q2 2024 compared to Q2 2023. General and administrative expenses of $2,390,873 were lower by $66,500 compared to $2,457,373 in Q2 2023.

Six Months Ended June 30, 2024 and June 30, 2023

The Company incurred a net loss of $19,140,372 during the six-month period ended June 30, 2024 (“YTD 2024”), higher by $4,625,693 compared to a net loss of $14,514,679 for the same period in 2023 (“YTD 2023”).

The higher net loss in YTD 2024 was due to higher expenditures in YTD 2024 compared to YTD 2023 as outlined below:

| ● | General exploration expenses were $11,279,762 in YTD 2024 and were higher by $2,357,417 compared to $8,922,345 in YTD 2023. The key exploration and evaluation expenditures relate to the Botswana assets. Drilling and related operating site activities increased significantly in YTD 2024 with increased activities at the operating sites during the second quarter in 2024 compared to the same period in the prior year.

| ● | Depreciation expense was $733,902 in YTD 2024 and was higher by $644,142 compared to $89,760 in YTD 2023. The increase in depreciation in 2024 was due to an increase in property, plant and equipment acquired towards the end of 2023 which started to depreciate during 2024.

| ● | Share-based payment in YTD 2024 was $779,224 compared to nil in YTD 2023.

| ● | Foreign exchange loss totaled $214,002 in YTD 2024 and was higher by $110,099 compared to $103,903 in YTD 2023. The loss in YTD 2024 was due to an overall weakening of the Botswana Pula against the Canadian dollar and the Canadian dollar weakening against the United States dollar.

| ● | Interest and financing costs were $1,530,455 in YTD 2024 and were higher by $836,623 compared to $693,832 in YTD 2023. The higher interest costs related to the Term Loan as well as the interest charged on the lease liabilities associated with the acquisition of the Syringa Lodge and the purchase of drilling equipment.

| ● | General and administrative expenses of $4,342,809 during YTD 2024 were slightly higher by $28,014 compared to $4,314,785 in YTD 2023.

The higher loss in YTD 2024 was partially offset by the lower DSU compensation in YTD 2024 compared to YTD 2023. DSU compensation (net of fair value movement) was $244,397 during YTD 2024 and was lower by $62,008 compared to $306,405 during YTD 2023. The decrease is attributed to a fair value movement. The total value of DSUs granted in YTD 2024 was higher than in YTD 2023, due to an increase in the number of directors on the Board of Directors, with the increase partially offset by the drop in the fair value of outstanding DSUs due to a decrease in the Company’s share price.

Cash Flows

The following table summarizes the cash flows:

|  | Three months ended June 30, |  |  | Six month ended June 30 |
|  | 2024 ($) |  |  | 2023 ($) |  |  | 2024 ($) |  |  | 2023 ($) |
Cash flows |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operations |  |  | (8,453,330 | ) |  |  | (7,735,074 | ) |  |  | (16,628,017 | ) |  |  | (13,602,186 | )
Working capital items |  |  | 213,699 |  |  |  | (1,026,892 | ) |  |  | (1,134,069 | ) |  |  | (1,120,928 | )
Operating activities |  |  | (8,239,631 | ) |  |  | (8,761,966 | ) |  |  | (17,762,086 | ) |  |  | (14,723,114 | )
Investing activities |  |  | (43,181 | ) |  |  | (391,031 | ) |  |  | (128,277 | ) |  |  | (1,391,031 | )
Financing activities |  |  | 27,142,286 |  |  |  | 24,978,176 |  |  |  | 26,826,166 |  |  |  | 32,216,791 |
Increase (decrease) in cash before effects of currency translation for foreign operations |  |  | 18,859,474 |  |  |  | 15,825,179 |  |  |  | 8,935,803 |  |  |  | 16,102,646 |
Effects of currency translation on cash |  |  | (144,778 | ) |  |  | 468,466 |  |  |  | (99,914 | ) |  |  | 342,255 |
Increase (decrease) in cash |  |  | 18,714,696 |  |  |  | 16,293,645 |  |  |  | 8,835,889 |  |  |  | 16,444,901 |
Cash – beginning of period |  |  | 9,366,821 |  |  |  | 5,314,247 |  |  |  | 19,245,628 |  |  |  | 5,162,991 |
Cash – end of period |  |  | 28,081,517 |  |  |  | 21,607,892 |  |  |  | 28,081,517 |  |  |  | 21,607,892 |

Operating Activities

Net cash used in operating activities was $8,239,631 in Q2 2024 compared to $8,761,966 in Q2 2023. The cash used in operations in Q2 2024 decreased by $522,335, mainly driven by an increase in cash operating costs as a result of increasing operating activities in Botswana, which was more than offset by a higher working capital in Q2 2023.

Net cash used in operating activities in YTD 2024 was $17,762,086 compared to $14,723,114 in YTD 2023. The increase in net cash used in operating activities during YTD 2024 was mainly driven by an increase in cash operating costs as a result of increasing operational activities in Botswana.

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Investing Activities

Key investing activities relate to the acquisition of property, plant and equipment. During Q2 2024, investing activities totaled $43,181 compared to $391,031 in Q2 2023. In YTD 2024, investing activities totaled $128,277 compared to $1,391,031 in YTD 2023, lower by $1,262,754. The higher spending in Q2 2023 and YTD 2023 was related to the purchase of tools and parts for the three drills which were leased in 2023.

Financing Activities

Cash flows generated in financing activities amounted to $27,142,286 in Q2 2024 compared to $24,978,176 in Q2 2023. The increase in cash flows in Q2 2024 compared to Q2 2023 was due to higher net proceeds from a non-brokered private placement completed in June 2024 for a total of $27.5 million, compared to net proceeds of $25 million from a financing in June 2023 including the repayment of the Promissory Note in Q2 2023.

Cash flows generated in financing activities during YTD 2024 was $26,826,166, lower by $5,390,625 compared to $32,216,791 in YTD 2023. The Company closed two financing during the first six months of 2023, in February and in June 2023, for aggregate proceeds of $40M, compared to $27.5M received in the first six months of 2024 from the non-broker private placement completed in June 2024. The Company repaid the promissory note from Pinnacle Island LP for $7.3M with the proceeds from the financing in YTD 2023.

Financial Position

The following information regarding the financial position of the Company as at June 30, 2024 and December 31, 2023 is derived from the Company’s unaudited condensed interim consolidated financial statements for the six months ended June 30, 2024 and the audited consolidated financial statements for the year ended December 31, 2023.

|  | As at June 30, 2024 |  |  | As at December 31, 2023 |
ASSETS |  |  |  |  |  |  |  |
Cash |  |  | 28,081,517 |  |  |  | 19,245,628 |
Other current assets |  |  | 2,772,415 |  |  |  | 1,645,280 |
Exploration and evaluation assets |  |  | 8,699,085 |  |  |  | 8,594,798 |
Property, plant and equipment |  |  | 7,981,157 |  |  |  | 8,488,499 |
TOTAL ASSETS |  |  | 47,534,174 |  |  |  | 37,974,205 |
LIABILITIES |  |  |  |  |  |  |  |
Trade payables and accrued liabilities |  |  | 4,273,213 |  |  |  | 4,280,146 |
Lease liabilities |  |  | 1,306,906 |  |  |  | 1,611,143 |
Vehicle financing |  |  | 190,953 |  |  |  | 236,124 |
Provision for leave and severance |  |  | 770,185 |  |  |  | 510,202 |
Term Loan |  |  | 18,448,467 |  |  |  | 17,956,423 |
DSUs liability |  |  | 1,128,878 |  |  |  | 884,481 |
Net smelter return option liability |  |  | 2,750,000 |  |  |  | 2,750,000 |
TOTAL LIABILITIES |  |  | 28,868,602 |  |  |  | 28,228,519 |
SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |
Preferred shares |  |  | 31,516 |  |  |  | 31,516 |
Additional paid-in capital |  |  | 143,874,771 |  |  |  | 116,069,973 |
Deficit |  |  | (123,707,188 | ) |  |  | (104,566,816 | )
Foreign currency translation reserve |  |  | (1,533,527 | ) |  |  | (1,788,987 | )
TOTAL SHAREHOLDERS’ EQUITY |  |  | 18,665,572 |  |  |  | 9,745,686 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  | 47,537,174 |  |  |  | 37,974,205 |

The Company’s cash balance on June 30, 2024 increased from the amount on December 31, 2023, primarily due to the financing in June 2024 as described in the “Liquidity” section under “Financing”.

Other current assets increased by $1,127,135 due to the purchase of critical spare parts during Q2 2024 and trade payables and accrued liabilities slightly decreased by $7,203 as at June 30, 2024 compared to the amounts as at December 31, 2023.

The slight decrease in exploration and evaluation assets was primarily due to foreign currency exchange fluctuation. Property, plant and equipment decreased by $507,342 as of June 30, 2024 compared to $8,488,499 as at December 31, 2023 as a result of depreciation.

The Company’s lease liabilities were $1,306,906 as at June 30, 2024, lower by $304,237 compared to $1,611,143 as at December 31, 2023, due to lease payments made in Q2 2024.

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The increase in the Term Loan by $492,044 was attributed to the accretion of the value of the warrants issued in connection with the Term Loan. The increase in paid-in capital by $27,804,798 is mainly driven by the financings that closed on June 14, 2024 and June 21, 2024.

Liquidity

Ca pital Resources

For the three months ended June 30, 2024, the Company incurred a loss of $9,793,192 and reported an accumulated deficit of $123,707,188 as at June 30, 2024 (FY 2023 – $104,566,816). At the end of Q2 2024, the Company required additional funds to continue its planned operations and meet its future obligations, commitments and forecasted expenditures through June 30, 2025. Management is aware, in making its assessment, of material uncertainties related to events and conditions that may cast a substantial doubt upon the Company’s ability to continue as a going concern, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. The accompanying Financial Statements do not reflect the adjustments to the carrying values of assets and liabilities, expenses and financial position classifications that would be necessary if the going concern assumption was not appropriate. These adjustments could be material. In assessing whether a going concern assumption is appropriate, management considers all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period.

Going Concern

As at June 30, 2024, the Company had $28,081,517 in available cash (FY 2023 – $19,245,628). There are no sources of operating cash flows. Given the Company’s current financial position and the ongoing exploration and evaluation expenditures, the Company will need to raise additional capital through the issuance of equity or other available financing alternatives to continue funding its operating, exploration and evaluation activities, and re-development of the mineral properties. Although the Company has been successful in its past fund-raising activities, there is no assurance as to the success of future fundraising efforts or as to the sufficiency of funds raised in the future.

F inancings

During the six months ended June 30, 2024, the Company completed the following financing transactions:

On June 14, 2024, the Company closed the first tranche of a non-brokered private placement offering (the “June 2024 Financing”), pursuant to which the Company issued an aggregate 19,234,614 units of the Company (the “Units”) at a price of $0.78 per Unit (the “Issue Price”) for aggregate gross proceeds of $15,002,999. Each Unit is comprised of one common share of the Company (each, a “Common Share”) and one common share purchase warrant of the Company (each, a “Warrant”).

On June 21, 2024, the Company closed the second tranche of the June 2024 Financing and issued an additional 16,021,795 Units at the Issue Price for gross proceeds of $12,497,000. Together with proceeds from the first tranche, the total size of the June 2024 Financing is approximately $27.5 million.

Each Warrant entitles the holder thereof to acquire one Common Share at any time prior to 5:00 p.m. (Eastern Standard Time) for a period expiring 60 months following the date of issuance (the “Expiry Date”) at a price of $1.10 per Common Share, subject to acceleration as described herein. If, at any time prior to the Expiry Date, the volume-weighted average trading price of the Common Shares on the TSXV (or such other principal exchange or market where the Common Shares are then listed or quoted for trading) is at least $2.00 per Common Share for a period of 20 trading days, the Company may, at its option, elect to accelerate the Expiry Date to a date (the “Accelerated Expiry Date”) that is not less than 30 days following the date that the Company provides written notice to the holders of the Warrants of the Accelerated Expiry Date.

The net proceeds of the June 2024 Financing will be used by the Company to advance the exploration and development of its past-producing Ni-Cu-Co sulphide assets in Botswana and for general corporate and working capital purposes. See “Use of Proceeds “ for more details.

| 43 |

On December 14, 2023, the Company closed a financing (the “December Financing”), comprised of a brokered private placement of units (the “Private Placement”) and an amended Term Loan. The Private Placement was completed in accordance with the terms of an agency agreement dated December 14, 2023 and entered into by the Company with Cormark Securities Inc. and BMO Capital Markets, as co-lead agents, and Canaccord Genuity Corp., Fort Capital Securities Ltd. and Paradigm Capital Inc. Pursuant to the Private Placement, the Company issued an aggregate of 13,133,367 Common Shares at a price of $1.20 per Common Share for aggregate gross proceeds of $15,760,040. The principal amount of the Term Loan has been increased by $5,882,353 (the “Additional Principal Amount”) from $15,000,000 to $20,882,353. The Additional Principal Amount was subject to an original issue discount of approximately 15% and was advanced by Cymbria Corporation (“Cymbria”) to the Company as a single advance of $5,000,000. The net proceeds from the December Financing were $19,743,845 after fees and expenses, which are being used to advance the exploration and evaluation of the Selebi Mines and the Selkirk Mine and for general corporate and working capital purposes. As at June 30, 2024, nearly all of the net proceeds of the December Financing have been used as contemplated. See “Use of Proceeds” for more details.

Use of Proceeds

The following table provides a summary of the principal use of proceeds of the June 2024 Financing and December Financing.

Principal Purpose |  | Estimated Amount $’000 |  |  | Amounts Expended as at June 30, 2024 $’000 |
June 2024 Financing |  |  |  |  |  |  |  |
Activities relating to the Selebi Mines |  |  | 14,100 | (1) |  |  | Nil |
Activities relating to the Selkirk Mine |  |  | 7,100 | (2) |  |  | Nil |
General corporate and working capital |  |  | 6,100 | (3) |  |  | Nil |
|  |  | 27,300 |  |  |  | Nil |
December Financing |  |  |  |  |  |  |  |
Activities relating to the Selebi Mines |  |  | 11,520 | (4) |  |  | 11,000 |
Activities relating to the Selkirk Mine |  |  | 400 | (5) |  |  | 335 |
General corporate and working capital |  |  | 7,839 | (6) |  |  | 6,120 |
|  |  | 19,759 |  |  |  | 17,455 |

Notes:

| (1) | Represents approximately: (i) $11,500,000 for the advancement of the Selebi Mines towards a pre-feasibility study; (ii) $1,370,000 for mining licence extension payment; and (iii) $ 1,361,062 for the last installment of the purchase price of Syringa Lodge.
| (2) | Represents the cost to advance Selkirk Mine towards a pre-feasibility study.
| (3) | Represents approximately: (i) $1,044,118 allocated to the payment of interest on the Term Loan; and (ii) $5,055,882 allocated to general corporate expenses.
| (4) | Represents approximately: (i) $8,325,000 for the advancement of the Selebi Mines towards a NI 43-101 compliant MRE; (ii) $1,400,000 for mining licence extension payment; and (iii) $1,795,000 in local management, consulting, accounting, finance, human resources and health/safety/environmental/security.
| (5) | Represents certain geophysics and geology costs, care and maintenance and prospecting licences.
| (6) | Represents approximately: (i) $2,080,000 allocated to the payment of interest on the Term Loan; and (ii) $5,759,000 allocated to general corporate expenses

Working Capital

As at June 30, 2024, the Company had a positive working capital of $25,273,813 (December 31, 2023 – $14,999,619), calculated as total current assets less total current liabilities. The increase in working capital is mainly due to an increase in cash, as well as in spare parts, and a decrease in lease liabilities. See “Liquidity” for more details.

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Contractual Obligations and Contingencies

Selebi Assets

As per the Selebi asset purchase agreement (the “Selebi APA”), the aggregate purchase price payable to the seller for the Selebi Assets is the sum of US$56,750,000 which amount shall be paid in three instalments:

● | US$1,750,000 payable on the closing date. This payment has been made.
● | US$25,000,000 upon the earlier of: (a) approval by the Botswana Ministry of Mineral Resources, Green Technology and Energy Security (“MMRGTES”) of the Company’s Section 42 and Section 43 applications (further extension of the mining licence and conversion of the mining licence into an operating licence, respectively); and (b) on the expiry date of the study phase, January 31, 2025, which can be extended for one year.
● | The third instalment of US$30,000,000 is payable on the completion of mine construction and production start-up by the Company on or before January 31, 2030, but not later than four years after the approval by the Botswana Minister of MMRGTES of the Company’s Section 42 and Section 43 applications.
● | Payment of care and maintenance funding contribution in respect of the Selebi Assets for a total of US$5,178,747 from March 22, 2021 to the closing date. This payment has been made.

As per the terms 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 the Company determines that the Selebi Assets are not economical. The Company also has an option to pay in advance the second and third payments in the event the Company determines that the Selebi Assets are economical. The Company’s accounting policy, as permitted by ASC 450 - Contingencies, is to measure and record contingent consideration when the conditions associated with the contingency are met. As of June 30, 2024, none of the conditions of the second and third instalment are met. Hence, these amounts are not accrued in the 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.

Phikwe South and the Southeast Extension

On August 16, 2023, the Company announced that it had entered into a binding commitment letter with the liquidator of BCL to acquire a 100% interest in two additional deposits, Phikwe South the Southeast Extension, located adjacent to and immediately north of the Selebi North historical workings. The acquisition of the Phikwe South and the Southeast Extension deposits is subject to customary closing conditions, and is expected to close in Q3 2024.

The upfront cost to the Company to acquire these additional mineral properties is US$1,000,000. In addition, the Company has agreed to additional work commitments of US$5,000,000 in the aggregate over the next four years. As a result of the extension of the Selebi mining licence, the remaining asset purchase obligations of the Company outlined in the Selebi APA will each increase by 10%, US$5,500,000 in total, while the trigger events remain unchanged.

Selkirk Mine

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$25 million would be due upon the approval by the Minister of MMRGTES of the Company’s Section 42 and Section 43 applications (further extension of the Selkirk mining licence and conversion of the Selkirk mining licence into an operating licence, respectively). For the third Selebi instalment of US$30 million, if Selkirk were commissioned earlier than Selebi, the payment would trigger on Selkirk’s commission date.

Right-of-Use Assets

On July 9, 2022, the Company executed a sales agreement with Tuli Tourism Pty Ltd. (“Tuli”) for the Syringa Lodge in Botswana and obtained possession of the property in August 2022. Pursuant to the sales agreement, the aggregate purchase price payable to the seller is $3,213,404. A deposit of $482,011 was paid on August 17, 2022. The balance is payable in two instalments of $1,365,697 on each of August 1, 2023 and August 1, 2024. The first instalment has been made and the second instalment is yet to be made. In addition to the above purchase price, the Company will pay to Tuli agreed interest in twelve equal monthly instalments of $13,657 each, followed by twelve equal monthly instalments of $6,828.

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On March 14, 2023, the Company entered into a drilling equipment supply agreement with Forage Fusion Drilling Ltd. (“Forage”) of Hawkesbury, Ontario to purchase specific drilling equipment on a “rent to own” basis with the purchase price to be paid in monthly payments. Pursuant to the agreement, the aggregate purchase price payable to Forage is $2,942,000. A payment of $1,700,000 was paid in March 2023 to purchase all the tooling, diamonds and critical spares required for 32,000 metres of drilling. The balance, covering the purchase of the drills, was payable in twelve equal monthly instalments of $103,500. The equipment arrived at the site in July 2023, and is now 100% owned by PNRL.

Post Creek

Commencing August 1, 2015, the Company is obligated to pay advances on the Post Creek net smelter return of $10,000 per annum. To date in 2024, the Company paid $5,000, which will be deducted from any payments to be made under the net smelter return.

Halcyon

Commencing August 1, 2015, the Company is obligated to pay advances on the Halcyon net smelter return of $8,000 per annum. To date in 2024, the Company paid $4,000, which will be deducted from any payments to be made under the net smelter return.

Related Party Transactions

Related party transactions are summarized below and include transactions with the following individuals or entities:

Key management (defined as members of the Board and senior officers) compensation was related to the following:

|  | June 30, 2024 |  |  | June 30, 2023 |
Management fees |  |  | 1,569,500 |  |  |  | 1,630,663 |
Corporate and administration expenses |  |  | 200,000 |  |  |  | 121,182 |
|  |  | 1,769,500 |  |  |  | 1,751,845 |

As a result of the financing on June 28, 2023 with Cymbria and EdgePoint Investment Group Inc., as portfolio manager on behalf of certain mutual funds managed by it (“EdgePoint”), and the increase of the Term Loan by the Additional Principal Amount on December 14, 2023 (the “EdgePoint Transactions”), Cymbria and certain other funds managed by EdgePoint (the “Financing Parties”) have acquired a total of 16,037,800 Common Shares, representing approximately 10.7% of the Company’s issued and outstanding shares. The Financing Parties also acquired on closing an aggregate of 6,024,000 warrants with a three-year term and an exercise price of $1.4375 which, if exercised, together with the shares acquired at closing, would result in the Financing Parties holding approximately 14.2% of the shares in the aggregate (calculated on a partially diluted basis). As a result of the EdgePoint Transactions, the Financing Parties are related parties of PNRL. During the six months ended June 30, 2024, the Company paid interest of $$1,038,412 to the Financing Parties (June 30, 2023 – nil).

On June 14, 2024, as part of the June 2024 Financing, EdgePoint further subscribed for 7,692,307 Units at $0.78 per Unit for gross proceeds of approximately $6 million. Each Unit is comprised of one Common Share and one Warrant. As of June 30, 2024, EdgePoint beneficially owns 23,833,224 Common Shares and 13,716,307 Warrants, representing approximately 12.8% of the issued and outstanding Common Shares (approximately 18.8% on a partially diluted basis assuming the exercise of all Warrants held by EdgePoint). Notwithstanding the foregoing, all Warrants issued to EdgePoint as part of the June Offering include customary restrictions providing that EdgePoint will not exercise such number of Warrants so as to bring its undiluted share ownership percentage above 20.0% of the Company’s issued and outstanding Common Shares without obtaining the requisite shareholder and Exchange approval.

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In connection with the June 2024 Financing, certain insiders of the Company have subscribed for an aggregate 1,389,140 Units for gross proceeds of $933,530.

Contingent Liabilities

There are no environmental liabilities associated with the Selebi Assets and the Selkirk Mine as at the acquisition dates as all liabilities prior to the acquisitions are the responsibility of the sellers. The Company has an obligation for the rehabilitation costs arising subsequent to the acquisitions. As of June 30, 2024, management is not aware of or anticipating any contingent liabilities that could impact the financial position or performance of the Company related to its exploration and evaluation assets.

The Company’s exploration and evaluation assets are affected by the laws and environmental regulations that exist in the various jurisdictions in which the Company operates. It is not possible to estimate the future contingent liabilities and the impact on the Company’s operating results due to future changes in the Company’s re-development of its projects or future changes in such laws and environmental regulations.

Segmented Disclosure

The Company operates in one reportable operating segment being that of the acquisition, exploration and evaluation of mineral properties in three geographic segments being Botswana, Barbados and Canada. The Company’s geographic segments are as follows:

|  | June 30, 2024 |  |  | December 31, 2023 |
Current assets |  |  |  |  |  |  |  |
Canada |  |  | 25,676,501 |  |  |  | 15,894,177 |
Barbados |  |  | 2,936,962 |  |  |  | 104,024 |
Botswana |  |  | 2,240,469 |  |  |  | 4,892,707 |
Total |  |  | 30,853,932 |  |  |  | 20,890,908 |

|  | June 30, 2024 |  |  | December 31, 2023 |
Property, plant and equipment |  |  |  |  |  |  |  |
Canada |  |  | 7,876 |  |  |  | 8,726 |
Botswana |  |  | 7,973,281 |  |  |  | 8,479,773 |
Total |  |  | 7,981,157 |  |  |  | 8,488,499 |

|  | June 30, 2024 |  |  | December 31, 2023 |
Exploration and evaluation assets |  |  |  |  |  |  |  |
Botswana |  |  | 8,699,085 |  |  |  | 8,594,798 |

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements as at June 30, 2024.

Share Capital Information

As of the date of this MD&A, the fully diluted share capital of the Company, including Common Shares issuable upon exercise of securities of the Company exercisable for Common Shares, is as follows:

Securities |  | Common Shares |
Common Shares |  |  | 185,708,588 |
Preferred shares (1) |  |  | 13,131 |
DSUs |  |  | 1,393,676 |
Warrants |  |  | 42,822,508 |
Stock options |  |  | 16,169,821 |
Fully diluted share capital |  |  | 246,107,724 |

(1) | The 118,186 outstanding preferred shares are convertible into Common Shares at a 9:1 ratio.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risk have been omitted as permitted under rules applicable to smaller reporting companies.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024. Based on the evaluation of these disclosure controls and procedures, management concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2024 due to the material weaknesses in internal control over financial reporting that were disclosed in our 2023 Form 10-K, namely: lack of controls and process over significant estimates and judgment applied in assessing complex accounting transactions; lack of segregation of duties over posting and reviewing complex accounting transactions; and lack of communication between legal consultants and management related to SEC filing requirements. As a result of the material weaknesses identified, we performed additional analysis and other post-closing procedures. Notwithstanding these material weaknesses, management has concluded that the condensed consolidated financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2024 in conformance with US GAAP.

Remediation of Previously Identified Material Weaknesses

The Company’s management, under the oversight of the Audit Committee, has implemented corrective actions to remediate past control deficiencies that contributed to certain material weaknesses, including obtaining specific resources to address the identified weaknesses. As we continue to evaluate and enhance our internal control over financial reporting, we may determine that additional measures to address the material weaknesses or adjustments to the remediation plan may be required. The material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

Except as noted above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We have no knowledge of any material, active, pending or threatened legal, administrative or judicial proceeding against us or our subsidiaries, nor are we, or any subsidiary, involved as a plaintiff or defendant in any material proceeding or pending litigation.

Item 1A. Risk Factors

Risks and other factors include those listed under “Risk Factors” in the 2023 Form 10-K and elsewhere in this Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following tables outline the number of Common Shares and securities that are convertible into Common Shares issued by the Company pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), during the second quarter ended June 30, 2024.

Date of Issuance |  | Security |  | Exercise Price per Security ($) |  |  | Number of Securities |
June 14, 2024 |  | Common Shares |  |  | N/A |  |  |  | 19,234,614 |
June 14, 2024 |  | Warrants |  |  | 1.10 |  |  |  | 19,234,614 |
June 21, 2024 |  | Common Shares |  |  | N/A |  |  |  | 16,021,795 |
June 21, 2024 |  | Warrants |  |  | 1.10 |  |  |  | 16,021,795 |
June 30, 2024 |  | DSUs |  |  | N/A |  |  |  | 350,202 |

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Insider Trading Arrangements

During the three months ended June 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act).

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Item 6. Exhibits

Exhibit No. |  | Description of Exhibit
10.13 |  | Binding term sheet dated June 4, 2024, among the Company, EdgePoint Investment Group Inc., as portfolio manager on behalf of certain mutual funds managed by it (collectively, “EdgePoint”), and Extract Advisors LLC, on behalf of Extract Capital Master Fund and Extract Exploration Fund (Cayman) LP (collectively, “Extract”), providing for the subscription of 7,692,307 units of the Company by each of EdgePoint and Extract for aggregate gross proceeds of approximately C$12,000,000 (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2023)
10.16 |  | Investor rights agreement dated June 14, 2024, between the Company and EdgePoint (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2023)
10.18 |  | Form of Warrant Certificate in respect of the June 2024 private placement (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2023)
10.19 |  | Form of Compensation Warrant Certificate in respect of the June 2024 private placement (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2023)
31.1 |  | Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer
31.2 |  | Rule 13a-14(a)/15d-14(a) certification of Interim Chief Financial Officer
32.1 |  | Section 1350 certification, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 |  | Includes the following financial and related information from Premium Nickel Limited Resource’s Quarterly Report on Form 10-Q as of and for the quarter ended June 30, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (1) Unaudited Condensed Interim Consolidated Balance Sheets, (2) Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss, (3) Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ (Deficit) Equity, (4) Unaudited Condensed Interim Consolidated Statements of Cash Flows, and (5) Notes to the Unaudited Condensed Interim Consolidated Financial Statements
104 |  | The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL

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SIGNATURES

Pursuant to requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 19, 2024. | PREMIUM NICKEL RESOURCES LTD. (Registrant)
| By: | /s/ Keith Morrison
| Name: | Keith Morrison
| Title: | Chief Executive Officer (principal executive officer)
| By: | /s/ Peter Rawlins
| Name: | Peter Rawlins
| Title: | Chief Financial Officer (principal financial officer)

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