Premium Resources (PRMLF) 6-K 2019 Q2 Condensed Interim Consolidated Financial Statements

Condensed Interim Consolidated Financial Statements

For the quarter ended June 30, 2019

(In accordance with International Financial Reporting Standards (“IFRS”) and stated in thousands of Canadian dollars, unless otherwise indicated)

INDEX

Notice to Reader of the Unaudited Condensed Interim Financial Statements

Condensed Interim Consolidated Financial Statements

● Condensed Interim Consolidated Statements of Financial Position

● Condensed Interim Consolidated Statements of Comprehensive Loss

● Condensed Interim Consolidated Statements of Changes in Equity

● Condensed Interim Consolidated Statements of Cash Flows

● Notes to the Condensed Interim Consolidated Financial Statements

Notice to reader of the unaudited CONDENSED interim CONSOLIDATED financial statements

For the six months period ended June 30, 2019

In accordance with National Instrument 51-102, of the Canadian Securities Administrators, North American Nickel Inc. (the “Company” or “North American Nickel”) discloses that its auditors have not reviewed the unaudited condensed interim consolidated interim financial statements.

The unaudited condensed interim consolidated financial statements of the Company for the six months period ended June 30, 2019 (“Financial Statements”) have been prepared by management. The Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto of the Company for the fiscal year ended December 31, 2018, which are available at the SEDAR website under the Company’s profile (www.sedar.com). The Financial Statements and the discussion in Notes to the Financial Statements are stated in thousands of Canadian dollars, unless otherwise indicated, and are prepared in accordance with International Financial Reporting Standards (“IFRS”).

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Condensed Interim Consolidated Statements of Financial Position

(Unaudited - Expressed in thousands of Canadian dollars)

	Notes	June 30, 2019			December 31, 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents			36			339
Short term investments	4		1,000			2,500
Receivables and other current assets	5		97			133
TOTAL CURRENT ASSETS			1,133			2,972
NON-CURRENT ASSETS
Property, plant and equipment			30			35
Exploration and evaluation assets	6		64,925			64,479
Reclamation of deposit	6		14			14
TOTAL NON-CURRENT ASSETS			64,969			64,528
TOTAL ASSETS			66,102			67,500
LIABILITIES
CURRENT LIABILITIES
Trade payables and accrued liabilities	7, 9		361			556
TOTAL CURRENT LIABILITIES			361			556
TOTAL LIABILITIES			361			556
EQUITY
Share capital - preferred	8		591			591
Share capital – common	8		87,947			87,947
Reserve	8		6,188			7,749
Deficit			(28,985	)		(29,343	)
TOTAL EQUITY			65,741			66,944
TOTAL LIABILITIES AND EQUITY			66,102			67,500

Nature of Operations (Note 1)

Subsequent Events (Note 14)

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

Approved by the Board of Directors on August 28, 2019

“signed”	“signed”
Keith Morrison Director	Doug Ford Audit Committee Chair

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Condensed Interim Consolidated Statements of Comprehensive Loss

(Unaudited - Expressed in thousands of Canadian dollars)

		Three months ended						Six months ended
	Notes	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
EXPENSES
General and administrative expenses	9, 13		(518	)		(641	)		(1,053	)		(1,181	)
Property investigation			(125	)		(34	)		(166	)		(34	)
Amortization			(2	)		(3	)		(5	)		(7	)
Share-based payments	8		-			(30	)		-			(317	)
			(645	)		(708	)		(1,224	)		(1,539	)
OTHER ITEMS
Interest income			4			21			22			21
Foreign exchange loss			(2	)		(38	)		(1	)		(45	)
			2			(17	)		21			(24	)
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD			(643	)		(725	)		(1,203	)		(1,563	)
Basic and diluted weighted average number of common shares outstanding			787,928,500			739,210,551			787,928,500			647,412,846
Basic and diluted loss per share			(0.00	)		(0.00	)		(0.00	)		(0.00	)

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

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Condensed Interim Consolidated Statements of Changes in Equity

(Unaudited - Expressed in thousands of Canadian dollars)

	Notes	Number Shares		Share Capital			Preferred Stock		Reserve			Deficit			Total Equity
BALANCE AT DECEMBER 31, 2017			554,595,167		73,598			591		5,089			(26,550	)		52,728
Net and comprehensive loss for the period			-		-			-		-			(1,563	)		(1,563	)
Share capital issued through private placement	8		233,333,333		17,500			-		-			-			17,500
Share issue costs	8		-		(324	)		-		-			-			(324	)
Value allocated to warrants	8		-		(2,572	)		-		2,572			-			-
Forfeited/expired options	8		-		-			-		(79	)		79			-
Share-based payments	8		-		-			-		317			-			317
BALANCE AT JUNE 30, 2018			787,928,500		88,202			591		7,899			(28,034	)		68,658
BALANCE AT DECEMBER 31, 2018			787,928,500		87,947			591		7,749			(29,343	)		66,944
Net and comprehensive loss for the period													(1,203	)		(1,203	)
Expired warrants	8		-		-			-		(1,561	)		1,561			-
BALANCE AT JUNE 30, 2019			787,928,500		87,947			591		6,188			(28,985	)		65,741

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

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Condensed Interim Consolidated Statements of Cash Flows

(Unaudited - Expressed in thousands of Canadian dollars)

		Six months ended
	Notes	June 30, 2019			June 30, 2018
OPERATING ACTIVITIES
Loss for the period			(1,203	)		(1,563	)
Items not affecting cash:
Amortization			5			7
Share based payments			-			317
Interest income			(22	)		(21	)
Changes in working capital	10		3			151
Other:
Interest received			32			25
Net cash used in operating activities			(1,185	)		(1,084	)
INVESTING ACTIVITIES
Expenditures on exploration and evaluation assets (includes changes in working capital)			(618	)		(4,217	)
Short-term investments			1,500			(12,000	)
Net cash used in investing activities			882			(16,217	)
FINANCING ACTIVITIES
Proceeds from issuance of common shares			-			17,500
Direct financing costs			-			(324	)
Net cash provided by financing activities			-			17,176
Change in cash equivalents for the period			(303	)		(125	)
Cash and cash equivalents, beginning of the period			339			398
Cash and cash equivalents, end of the period			36			273

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

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

1. NATURE AND CONTINUANCE OF OPERATIONS

North American Nickel Inc. (the “Company” or “NA Nickel”) was incorporated on September 23, 1983, under the laws of the Province of British Columbia, Canada. The head office and principal address is located at 3400 – 100 King Street West, PO Box 130, Toronto, Ontario, M5X 1A4 and the records office of the Company is located at Suite 2200, 1055 West Hastings Street, Vancouver, British Columbia, Canada, V6E 2E9. The Company’s common shares trade on the TSX Venture Exchange (“TSXV”) under the symbol “NAN”.

The Company’s principal business activity is the exploration and development of mineral properties in Greenland, Canada and United States. The Company has not yet determined whether any of these properties contain ore reserves that are economically recoverable. The recoverability of carrying amounts shown for exploration and evaluation assets is dependent upon a number of factors including environmental risk, legal and political risk, the existence 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 development, and to attain sufficient net cash flow from future profitable production or disposition proceeds.

These 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. To date, the Company has not generated profitable operations from its resource activities and will need to invest additional funds in carrying out its planned exploration, development and operational activities. These 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 that might be necessary should the Company be unable to continue as a going concern.

The exploration and evaluation properties in which the Company currently has an interest are in the exploration stage. As such, the Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and cover administrative costs, the Company will use its existing working capital and raise additional amounts as needed. Although the Company has been successful in its past fundraising activities, there is no assurance as to the success of future fundraising efforts or as to the sufficiency of funds raised in the future. The Company will continue to assess new properties and seek to acquire interests in additional properties if there is sufficient geologic or economic potential and if adequate financial resources are available to do so.

The condensed interim consolidated financial statements were approved and authorized for issuance by the Board of Directors of the Company on August 28, 2019.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of Compliance

These condensed interim consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”), including IAS 34 Interim Financial Statements. The condensed interim consolidated financial statements do not include all of the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s audited annual financial statements for the year ended December 31, 2018. Any subsequent changes to IFRS that are reflected in the Company’s consolidated financial statements for the year ended December 31, 2019 could result in restatement of these condensed interim consolidated financial statements.

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

(b) Basis of Preparation

These condensed interim consolidated financial statements have been prepared under the historical cost convention, modified by the revaluation of any financial assets and financial liabilities where applicable. The preparation of financial statements in conformity with IFRS 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 condensed interim consolidated financial statements are consistent with those used in the preparation of the annual consolidated financial statements for the year ended December 31, 2018.

(c) Basis of consolidation

These condensed interim consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary, North American Nickel (US) Inc. which was incorporated in the State of Delaware on May 22, 2015. Consolidation is required when the Company is exposed, or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. All intercompany transactions, balances, income and expenses are eliminated upon consolidation.

3. CHANGES IN ACCOUNTING POLICIES

New standards adopted during the six months period ended June 30, 2019:

IFRS 16 - “Leases”

IFRS 16 replaces current guidance in IAS 17. Under IAS 17, lessees were required to make a distinction between a finance lease (on the balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognize a lease liability reflecting future lease payments and a “right-of-use asset” for virtually all lease contracts. The IASB has included an optional exemption for certain short-term leases and leases of low value assets, however this exemption can only be applied by lessees. The standard applies to annual periods beginning on or after January 1, 2019, with earlier application permitted. The adoption of this standard did not result in any impact to the Company’s financial statements.

IFRIC 23 – “Uncertainty over Income Tax Treatments”

In June 2017, the IFRS Interpretations Committee of the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (IFRIC 23). The interpretation provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax treatments. The Interpretation is applicable for annual periods beginning on or after January 1, 2019. Earlier application is permitted. The Interpretation requires: (a) an entity to contemplate whether uncertain tax treatments should be considered separately, or together as a group, based on which approach provides better predictions of the resolution; (b) an entity to determine if it is probable that the tax authorities will accept the uncertain tax treatment; and (c) if it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainty based on the most likely amount or expected value, depending on whichever method better predicts the resolution of the uncertainty. The adoption of this interpretation did not result in any impact to the Company’s financial statements.

Standards, Interpretations and Amendments Not Yet Effective:

Amendments to References to the Conceptual Framework in IFRS Standards

On March 29, 2018 the International Accounting Standards Board (“IASB”) issued a revised version of its Conceptual Framework for Financial Reporting (the Framework), that underpins IFRS Standards. The IASB also issued Amendments to References to the Conceptual Framework in IFRS Standards (the Amendments) to update references in IFRS Standards to previous versions of the Conceptual Framework. Both documents are effective from January 1, 2020 with earlier application permitted.

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

Some Standards include references to the 1989 and 2010 versions of the Framework. The IASB has published a separate document which contains consequential amendments to affected Standards so that they refer to the new Framework, with the exception of IFRS 3 Business Combinations which continues to refer to both the 1989 and 2010 Frameworks. The Company does not intend to adopt the Amendments in its financial statements before the annual period beginning on January 1, 2020. The extent of the impact of the change has not yet been determined.

IAS 1 - Presentation of Financial Statements and IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

In October 2018, the IASB issued amendments to International Accounting Standard (“IAS”) 1, Presentation of Financial Statements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The amendments are to clarify the definition of ‘material’ and to align the definition used in the Conceptual Framework and the standards themselves. The amendments are effective January 1, 2020. The Company is evaluating the impact of the adoption of these amendments.

4. SHORT-TERM INVESTMENTS

Short-term investments are comprised of a highly liquid Canadian dollar denominated guaranteed investment certificate with an initial term to maturity greater than ninety days, but not more than one year, that is readily convertible to a contracted amount of cash. The counter-party is a Canadian financial institution. During the period ended June 30, 2019, the instrument was yielding an annual interest rate range of 1.40% (June 30, 2018 - 1.30%).

5. RECEIVABLES AND OTHER CURRENT ASSETS

A summary of the receivables and other current assets as of June 30, 2019 is detailed in the table below:

	June 30, 2019		December 31, 2018
Sales taxes receivable		48		75
Interest receivable		-		10
Other current assets		49		48
		97		133

Other current assets is comprised of prepaid expenses.

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

6. EXPLORATION AND EVALUATION ASSETS

	Canada								US		Greenland
	Post Creek Property		Halcyon Property		Quetico Claims		Lingman Lake		Section 35 Property		Maniitsoq Property		Total
Acquisition
Balance, December 31, 2018		288		222		42		-		8		42		602
Acquisition costs – cash		5		4		-		15		1		-		25
Balance, June 30 2019		293		226		42		15		9		42		627
Exploration
Balance, December 31, 2018		1,431		209		22		-		-		62,215		63,877
Administration		1		1		-		-		-		9		11
Corporate social responsibility		1		-		-		-		-		-		1
Property maintenance		-		-		-		-		-		17		17
Drilling		24		-		2		3		-		191		220
Environmental, health and safety		-		-		-		-		-		8		8
Geology		15		7		-		-		2		105		129
Geophysics		1		1		4		1		1		27		35
		42		9		6		4		3		357		421
Balance, June 30 ,2019		1,473		218		28		4		3		62,572		64,298
Total, June 30, 2019		1,766		444		70		19		12		62,614		64,925

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

	Canada							US		Greenland
	Post Creek Property		Halcyon Property		Quetico Claims		��	Section 35 Property		Maniitsoq Property		Total
Acquisition
Balance, December 31, 2017		278		214		-			6		36		534
Acquisition costs – cash		5		4		40			2		15		66
Balance June 30, 2018		283		218		40			8		51		600
Exploration
Balance, December 31, 2017		1,138		187		-			-		48,635		49,960
Administration		-		-		-			-		260		260
Corporate social responsibility		1		-		-			-		1		2
Environment, health And safety		-		-		-			-		29		29
Property maintenance		-		-		1			-		18		19
Drilling expenses		5		-		-			-		1,150		1,155
Camp operations		-		-		-			-		1,116		1,116
Helicopter charter aircraft		-		-		-			-		1,268		1,268
Geology		15		10		9			-		307		341
Geophysics		-		-		1			-		339		340
Infrastructure		-		-		-			-		13		13
Technical studies		-		-		-			-		7		7
		21		10		11			-		4,508		4,550
Balance June 30, 2018		1,159		197		11			-		53,143		54,510
Total, June 30, 2018		1,442		415		51			8		53,194		55,110

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

Post Creek

On December 23, 2009, the Company executed a letter of intent whereby the Company has an option to acquire a mineral claim known as the Post Creek Property located within the Sudbury Mining District of Ontario.

On April 5, 2010 and as amended on March 12, 2013, the Company entered into an option agreement to acquire a 100% interest in the Post Creek Property, subject to certain net smelter return royalties (“NSR”) and advance royalty payments. To December 31, 2015, the Company has completed the required consideration and acquired its interest in the Post Creek Property. Commencing August 1, 2015, the Company is obligated to pay advances on the NSR of $10 per annum, totalling $10 during the year ended December 31, 2018, the total of which will be deducted from any payments to be made under the NSR. The total advances paid during the six months period ended June 30, 2019 were $5, (June 30, 2018 - $5).

During the six months period ended June 30, 2019, the Company incurred exploration expenditures totalling $42 June 30 (June 30, 2018 - $21) on the Post Creek Property.

Halcyon

On April 5, 2010 and as amended on March 12, 2013, the Company entered into an option agreement to acquire rights to Halcyon Property, subject to certain NSR and advance royalty payments. To December 31, 2015, the Company has completed the required consideration and acquired its interest in the Halcyon Property. Commencing August 1, 2015, the Company is obligated to pay advances on the NSR of $8 per annum, totalling $8 during the year ended December 31, 2018, the total of which will be deducted from any payments to be made under the NSR.

During the six months period ended June 30, 2019, the Company incurred $13 (June 30, 2018 - $14) in exploration and license related expenditures on the Halcyon Property.

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

Quetico

on April 26, 2018, the Company acquired certain claims known as Quetico located within the Sudbury Mining District of Ontario. The Company incurred total acquisition and exploration related costs of $64 during the year ended December 31, 2018.

The Company had no minimum required exploration commitment for the year ended December 31, 2018 as it is not required to file any geoscience assessment work between the initial recording of a mining claim and the first anniversary date of the mining claim.

By the second anniversary of the recording of a claim and by each anniversary thereafter, a minimum of $400 worth of exploration activity per claim unit must be reported to the Provincial Recording Office. The company could maintain mining claims by filing an Application to Distribute Banked Assessment Work Credits form before any due date. Payments in place of reporting assessment work may also be used to meet yearly assessment work requirements, provided the payments are not used for the first unit of assessment work and consecutively thereafter. Payments cannot be banked to be carried forward for future use. The total annual work requirement for Quetico project after April 26, 2020 is $324 should the Company maintain the current size of the claims.

During the six months period ended June 30, 2019, the Company incurred $6 (June 30, 2018 - $51) in exploration and license related expenditures on the Quetico Property.

Section 35 Property

On January 4, 2016, the Company entered into a 10 year Metallic Minerals Lease (the “Lease”) with the Michigan Department of Natural Resources for an area covering approximately 320 acres. The terms of the Lease require an annual rental fee at a rate of US $3.00 per acre for years 1-5 and at a rate of US $6.00 per acre for years 6-10. The Company shall pay a minimum royalty at a rate of US $10.00 per acre for the 11^th year onwards, with an increase of an additional US $5.00 per acre per year up to a maximum of US $55.00 per acre per year. A production royalty of between 2% - 2.5% is payable from production of minerals and/or mineral products from an established mining operation area. The Company paid the first year rental fee and the required reclamation deposit of $14 (US $10). The Department of Natural Resources shall annually review the level of the reclamation deposit and shall require the amount to be increased or decreased to reflect changes in the cost of future reclamation of the leased premises.

During the six months period ended June 30, 2019, the Company spent a total of $4 in exploration and license related expenditures, (June 30, 2018 - $2).

Maniitsoq

The Company has been granted certain exploration licenses, by the Bureau of Minerals and Petroleum (“BMP”) of Greenland for exclusive exploration rights of an area comprising the Maniitsoq Property, located near Ininngui, Greenland. The Property is subject to a 2.5% NSR. The Company can reduce the NSR to 1% by paying $2,000 on or before 60 days from the decision to commence commercial production.

At the expiration of the first license period, the Company may apply for a second licence period (years 6-10), and the Company may apply for a further 3-year licence for years 11 to 13. Thereafter, the Company may apply for additional 3-year licences for years 14 to 16, 17 to 19 and 20 to 22. The Company will be required to pay additional license fees and will be obligated to incur minimum eligible exploration expenses for such years.

The Company may terminate the licenses at any time; however any unfulfilled obligations according to the licenses will remain in force, regardless of the termination.

Future required minimum exploration expenditures will be adjusted each year on the basis of the change to the Danish Consumer Price Index.

During the six months period ended June 30, 2019, the Company spent in aggregate of $357 (June 30, 2018 - $4,523) in exploration and license related expenditures on the Maniitsoq Property, which is comprised of the Sulussugut, Ininngui and Carbonatite Licenses. Further details on the licenses and related expenditures are outlined below.

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

Sulussugut License (2011/54)

(All references to amounts in Danish Kroners, “DKK” are in thousands of DKK)

Effective August 15, 2011, the Company was granted an exploration license (the “Sulussugut License”) by the BMP of Greenland for exclusive exploration rights of an area located near Sulussugut, Greenland. The Company paid a license fee of $6 (DKK 31) upon granting of the Sulussugut License. The application for another 5 year term on the Sulussugut License was submitted to the Greenland Mineral Licence & Safety Authority which was effective on April 11, 2016, with December 31, 2017 being the seventh year. During the year ended December 31, 2016, the Company paid a license fee of $8 (DKK 40) which provides for renewal of the Sulussugut License until 2020.

To December 31, 2015, under the terms of a preliminary license, the Company completed the exploration requirements of an estimated minimum of DKK 83,809 (approximately $15,808) between the years ended December 31, 2011 to 2015 by incurring $26,116 on the Sulussugut License. The accumulated exploration credits held at the end to December 31, 2015, of DKK 100,304 can be carried forward until 2019. Under the terms of the second license period, the required minimum exploration expenditures for the year ended December 31, 2017 was DKK 44,374 (approximately $8,955). As of December 31, 2018, the Company has spent $55,732 on exploration costs for the Sulussugut License.

To December 31, 2018, the Company has completed all obligations with respect to required reduction of the area of the license.

During the year ended December 31, 2018, the Company had approved exploration expenditures of DKK 79,604 (approximately $16,342) which results in the total cumulative surplus credits of DKK 326,111 (approximately $66,951). The credits may be carried forward until December 31, 2021.

The Company had no minimum required exploration for the year ended December 31, 2018. During the year ended December 31, 2018, the Company spent a total of $10,795 (December 31, 2017 - $11,079) in exploration and license related expenditures on the Sulussugut License.

During the six months period ended June 30, 2019, the Company spent a total of $197 in exploration and license related expenditures, (June 30, 2018 - $3,628).

Ininngui License (2012/28)

Effective March 4, 2012, the Company was granted an exploration license (the “Ininngui License”) by the BMP of Greenland for exclusive exploration rights of an area located near Ininngui, Greenland. The Company paid a license fee of $6 (DKK 32) upon granting of the Ininngui License. The Ininngui License was valid for 5 years until December 31, 2016, with December 31, 2012 being the first year. The Ininngui License is contiguous with the Sulussugut License.

To December 31, 2018, the Company’s expenditures exceeded the minimum requirement and the Company has a total cumulative surplus credits of DKK 35,509 (approximately $7,290). The credits may be carried forward until December 31, 2021.

The Company had no minimum required exploration for the year ended December 31, 2018. As of December 31, 2018, the Company has spent $5,121 on exploration costs for the Ininngui License.

Should the Company not incur the minimum exploration expenditures on the license in any one year from years 2-5, the Company may pay 50% of the difference in cash to BMP as full compensation for that year. This procedure may not be used for more than 2 consecutive calendar years and as at December 31, 2018, the Company has not used the procedure for the license.

During the year ended December 31, 2018, the Company spent a total of $1,423 (December 31, 2017 - $985) in exploration and license related expenditures on the Ininngui License.

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

During the six months period ended June 30, 2019, the Company spent a total of $37 in exploration and license related expenditures, (June 30, 2018 - $422).

Carbonatite License (2018/21)

Effective May 4, 2018, the Company was granted an exploration license (the “Carbonatite License”) by the BMP of Greenland for exclusive exploration rights of an area located near Maniitsoq in West Greenland. The Company paid a license fee of $7 (DKK 31) upon granting of the Carbonatite License. The Carbonatite License is valid for 5 years until December 31, 2022, with December 31, 2018 being the first year. As of December 31, 2018, the Company has spent $1,362 on exploration costs for the Carbonatite License.

During the year ended December 31, 2018, the Company spent a total of $1,369 in exploration and license related expenditures (December 31, 2017 - $Nil) for the Carbonatite License.

The Company had a minimum required exploration obligation of DKK 269 (approximately $55) for the year ended December 31, 2018. To December 31, 2018, the Company’s expenditures exceeded the minimum requirement and the Company has a total surplus credit of DKK 9,830 (approximately $2,018). The credit may be carried forward until December 31, 2021.

During the six months periods ended June 30, 2019, the Company spent a total of $123 in exploration and license related expenditures, (June 30, 2018 - $437).

7. TRADE PAYABLES AND ACCRUED LIABILITIES

	June 30, 2019		December 31, 2018
Trade payables		352		477
Amounts due to related parties (Note 9)		6		1
Accrued liabilities		3		78
		361		556

8. 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.

a) Common shares issued and outstanding

There were no common shares issued during the six months period ended June 30, 2019.

As at June 30, 2019, the Company has 787,928,500 common shares issued and outstanding, (June 30, 2018 – 787,928,500).

2018

On April 19, 2018, the Company closed a non-brokered private placement equity financing of 233,333,333 units at a price of $0.075 per unit and raised aggregate gross proceeds of $17,500. Each unit consists of one common share and one-half of one common share purchase warrant of the Company. Each warrant will entitle the holder to acquire one common share of the Company at an exercise price of $0.12 for a period of 24 months from its date of issuance. The Company incurred total share issuance costs of $579, of which $250 is recorded in trade payables at December 31, 2018. The Company allocated a $2,572 fair value to the warrants issued in conjunction with the private placement. The fair value of warrants was determined on a pro-rata basis using the Black-Scholes Option Pricing Model with the following assumptions; expected life of 2 years, expected dividend yield of 0%, a risk-free interest rate of 1.91% and an expected volatility of 94.26%.

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

Contemporary Amperex Technology Limited (“CATL”) subscribed for 200,000,000 units of the aforementioned private placement for a total purchase price of $15,000. At December 31, 2018, CATL beneficially owns, or exercises control or direction over approximately 25.38% of the currently issued and outstanding shares of the Company. As per the subscription agreement, CATL has pre-emptive rights and the right to nominate one director to the board of directors of the Company.

Sentient subscribed for 13,333,333 units of the aforementioned private placement for a total purchase price of $1,000. At December 31, 2018, Sentient beneficially owns, or exercises control or direction over 369,809,820 common shares constituting approximately 46.93% of the currently issued and outstanding shares of the Company.

As at December 31, 2018, the Company had 787,928,500 common shares issued and outstanding.

b) Preferred shares issued and outstanding

As at June 30, 2019 and June 30, 2018, there are 590,931 series 1 preferred shares outstanding.

The rights and restrictions of the preferred shares are as follows:

i)	dividends shall be paid at the discretion of the directors;
ii)	the holders of the preferred shares are not entitled to vote except at meetings of the holders of the preferred shares, where they are entitled to one vote for each preferred share held;
iii)	the shares are convertible at any time after 6 months from the date of issuance, upon the holder serving the Company with 10 days written notice; and
iv)	the number of the common shares to be received on conversion of the preferred shares is to be determined by dividing the conversion value of the share, $1 per share, by $0.90.

c) Warrants

A summary of common share purchase warrants activity during the six months period ended June 30, 2019 is as follows:

	June 30, 2019					December 31, 2018
	Number Outstanding			Weighted Average Exercise Price		Number Outstanding			Weighted Average Exercise Price
Outstanding, beginning of the period		257,972,836			0.12		176,175,413			0.12
Issued		-			-		116,666,664			0.12
Cancelled / Expired		(74,480,497	)		0.12		(34,869,241	)		0.12
Outstanding, end of the period		183,492,339			0.12		257,972,836			0.12

At June 30, 2019, the Company had outstanding common share purchase warrants exercisable to acquire common shares of the Company as follows:

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

Warrants Outstanding		Expiry Date	Exercise Price ($)		Weighted Average remaining contractual life (years)
	46,334,451	July 21, 20191,2,3		0.12		0.02
	20,491,224	August 15, 20193		0.12		0.01
	116,666,664	April 19, 2020		0.12		0.51
	183,492,339					0.54

¹The warrants were subject to an acceleration clause such that if the volume-weighted average trading price of the Company’s common shares on the TSX-V exceeds $0.18 per common share for a period of 10 consecutive trading days at any date before the expiration date of such warrants, the Company may, at its option, accelerate the warrant expiry date to within 30 days. To June 30, 2019, the Company’s common shares have not met the criterion for acceleration.

²On September 1, 2018, the TSXV approved an extension of the term of the warrants from July 21, 2018 to July 21, 2019. All other terms, including the exercise price, remain the same.

³Subsequently expired, unexercised.

d) Stock options

The Company 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 10% of the issued and outstanding common stock of the Company. Under the Plan, the exercise price of each option equals the market price or a discounted price of the Company’s stock as calculated on the date of grant. The options can be granted for a maximum term of 10 years.

A summary of option activity under the Plan during the six months period ended June 30, 2019 is as follows:

	June 30, 2019				December 31, 2018
	Number Outstanding		Weighted Average Exercise Price		Number Outstanding			Weighted Average Exercise Price
Outstanding, beginning of the period		25,945,500		0.18		20,720,500			0.23
Issued		-		-		6,425,000			0.12
Cancelled / Expired		-		-		(1,200,000	)		0.18
Outstanding, end of the period		25,945,500		0.18		25,945,500			0.18

There were no incentive stock options granted during the period ended June 30, 2019.

During the period ended June 30, 2018, the Company granted 6,425,000 incentive stock options to employees, directors and consultants with a maximum term of 5 years. All stock options vest immediately and are exercisable at $0.12 per common share. The Company calculates the fair value of all stock options using the Black-Scholes Option Pricing Model. The fair value of this grant amounted to $287 and was recorded as a share-based payments expense.

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

The fair value of stock options granted and vested during the period ended June 30, 2018 was calculated using the following assumptions:

	June 30, 2019		June 30, 2018
Expected dividend yield		-		0	%
Expected share price volatility		-		96.9% -101	%
Risk free interest rate		-		2.04%-2.17	%
Expected life of options		-		5 years

Details of options outstanding as at June 30, 2019 are as follows:

Options Outstanding		Options Exercisable		Expiry Date	Exercise Price		Weighted average remaining contractual life (years)
	2,440,000		2,440,000	Jul 9, 20191		0.62		0.00
	200,000		200,000	Aug 27, 2019		0.32		0.00
	100,000		100,000	Sep 26, 2019		0.26		0.00
	350,000		350,000	Nov 5, 2019		0.21		0.00
	1,000,000		1,000,000	Dec 19, 2019		0.22		0.02
	900,000		900,000	Feb 3, 2020		0.275		0.02
	450,000		450,000	Oct 5, 2020		0.20		0.02
	5,443,000		5,443,000	Jan 28, 2021		0.21		0.34
	7,637,500		7,637,500	Feb 21, 2022		0.12		0.78
	1,000,000		1,000,000	Dec 20, 2022		0.12		0.13
	5,725,000		5,725,000	Feb 28, 2023		0.12		0.82
	500,000		500,000	May 1, 2023		0.12		0.07
	200,000		200,000	May 4, 2023		0.12		0.03
	25,945,500		25,945,500					2.23

¹Subsequently expired, unexercised.

e) Reserve

The reserve records items recognized as stock-based compensation expense and other share-based payments until such time that the stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital. Amounts recorded for forfeited or expired unexercised options and warrants are transferred to deficit. During the year ended December 31, 2018 the Company recorded $317 of share-based payments and transferred $229 to deficit for expired options and warrants.

There were no share-based payments during the six months period ended June 30, 2019. During the six months period ended June 30, 2018 the Company recorded $317 of share-based payments to reserves. During the six months period ended June 30, 2019 the Company transferred $1,561 (June 30, 2018 - $79) to deficit for expired warrants and options.

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

9. RELATED PARTY TRANSACTIONS

The following amounts due to related parties are included in trade payables and accrued liabilities (Note 7):

	June 30, 2019		December 31, 2018
Directors and officers of the Company		6		1
Total		6		1

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

(a) Related party transactions

As of June 30, 2019, Sentient beneficially owns 369,809,820 common shares constituting approximately 46.93% of the currently issued and outstanding common shares.

As of June 30, 2019, CATL beneficially owns 200,000,000 common shares constituting approximately 25.38% of the currently issued and outstanding shares of the Company. CATL has pre-emptive rights and the right to nominate one director to the board of directors of the Company.

During the six months period ended June 30, 2019, the Company recorded $29 (June 30, 2018 - $188) in fees charged by a legal firm in which the Company’s chairman is a consultant.

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

Key management compensation was:

	June 30, 2019		June 30, 2018
Geological consulting fees – expensed		56		52
Geological consulting fees – capitalized		-		18
Management fees – expensed		374		379
Salaries - expensed		95		80
Share-based payments		-		192
Total		525		721

10. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in working capital for the six months period ended June 30, 2019 and 2018 are as follows:

	June 30, 2019			June 30, 2018
Decrease in accounts receivables		27			95
Decrease (increase) in prepaid expenses		(1	)		(9	)
(Decrease) increase in trade payables and accrued liabilities		(23	)		65
Total changes in working capital		3			151

During the period ended June 30, 2019, the Company:

i) Transferred $1,561 from reserve to deficit;

ii) recorded $172, the net change for accrued in exploration and evaluation expenditures.

During the period ended June 30, 2018, the Company:

iii) transferred $79 from reserve to deficit;

iv) recorded $403, the net change for accrued in exploration and evaluation expenditures.

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

11. COMMITMENTS AND CONTINGENCIES

The Company has certain commitments to meet the minimum expenditures requirements on its mineral exploration assets it has interest in.

Effective July 1, 2014, the Company had changes to management and entered into the following agreements for services with directors of the Company and a company in which a director has an interest:

i)	Directors’ fees: $2 stipend per month for independent directors and $3 stipend per month for the chairman of the board, and $2.5 for committee chairman.
ii)	Management fees: $31 per month effective June 2018.

Effectively on June 1, 2018, the Company has changed the terms with Keith Morrison, the CEO, from direct employment to contracted consultant and entered into service agreement with his company.

Each of the agreements shall be continuous and may only be terminated by mutual agreement of the parties, subject to the provisions that in the event there is a change of effective control of the Company, the party shall have the right to terminate the agreement, within sixty days from the date of such change of effective control, upon written notice to the Company. Within thirty days from the date of delivery of such notice, the Company shall forward to the party the amount of money due and owing to the party hereunder to the extent accrued to the effective date of termination.

12. SEGMENTED INFORMATION

The Company operates in one reportable operating segment being that of the acquisition, exploration and development of mineral properties in three geographic segments being Canada, Greenland and United States (Note 6). The Company’s geographic segments are as follows:

	June 30, 2019		December 31, 2018
Equipment
Canada		8		11
Greenland		22		24
Total		30		35

	June 30, 2019		December 31, 2018
Exploration and evaluation assets
Canada		2,299		2,214
Greenland		62,614		62,257
United States		12		8
Total		64,925		64,479

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Notes to the Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2019

(Unaudited - Expressed in thousands of Canadian dollars)

13. GENERAL AND ADMINISTRATIVE EXPENSES

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

	Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Consulting fees		84		81		165		174
Professional fees		26		61		35		87
Management fees		185		187		373		365
Investor relations		11		56		27		90
Filing fees		17		34		28		53
Salaries and benefits		147		98		278		185
General office expenses		48		124		147		227
Total		518		641		1,053		1,181

14. SUBSEQUENT EVENTS

There were no subsequent events that required adjustment to or disclosure in the consolidated financial statements.

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