Northx Nickel Corp.CSE: NIX

Financial Statement (northx q2 2024 fs)

Aug 23, 2024 at 12:35 AM UTC · Issued by Northx Nickel Corp.

(Formerly Archer Exploration Corp.)

Condensed Interim Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

(Unaudited - Expressed in Canadian dollars)

Tel: (604) 688-5421	BDO Canada LLP
Fax: (604) 688-5132	Unit 1100 Royal Centre
www.bdo.ca	1055 West Georgia Street, P.O. Box 11101
	Vancouver, BC
	V6C 3P3

Report of Independent Registered Public Accounting Firm

To the Members of the Audit Committee:

In accordance with our engagement letter dated May 7, 2024, we have performed an interim review of the condensed interim statement of financial position of NorthX Nickel Corp. (the "Company") as at June 30, 2024, the condensed interim statements of net loss and comprehensive loss for the three and six-month periods ended June 30, 2024, and the condensed interim statements of changes in shareholders' equity and cash flows for the six-month period ended June 30, 2024 (the "interim financial statements"). These interim financial statements are the responsibility of the Company's management.

We performed our interim review in accordance with Canadian generally accepted standards for a review of interim financial statements by an entity's auditor.

An interim review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements. Accordingly, we do not express such an opinion. An interim review does not provide assurance that we would become aware of any or all significant matters that might be identified in an audit.

Based on our interim review, we are not aware of any material modification that needs to be made for these interim financial statements to be in accordance with the International Accounting Standard 34 Interim Financial Reporting.

We have previously audited, in accordance with Canadian generally accepted auditing standards, the statement of financial position of the Company as at December 31, 2023, and the related statements of net loss and comprehensive loss, changes in shareholders' equity and cash flows for the 15 month period then ended (not presented herein). In our report dated April 24, 2024, we expressed an unmodified audit opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed interim statement of financial position as at June 30, 2024, is fairly stated, in all material respects, in relation to the financial statements from which it has been derived.

Other Matter

This report is solely for the use of the Audit Committee of the Company to assist it in discharging its regulatory obligation to review these interim financial statements and should not be used for any other purpose.

Chartered Professional Accountants

Vancouver, British Columbia

August 21, 2024

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms

NorthX Nickel Corp. (Formerly Archer Exploration Corp.) Condensed Interim Statements of Financial Position (Unaudited - Expressed in Canadian dollars)

		June 30,	December 31,
	Note	2024	2023
		$	$
ASSETS
Current
Cash		2,382,740	2,876,128
Receivables	6	72,022	234,729
Prepaid expenses	7	53,926	129,349
		2,508,688	3,240,206
Other assets	8,13	539,129	57,500
Exploration and evaluation assets	9	38,261,914	37,205,127
Property and equipment	10	86,160	88,135
Total assets		41,395,891	40,590,968
LIABILITIES
Current
Trade and other payables	11	331,093	739,549
Decommissioning and restoration provision	13	365,146	526,310
		696,239	1,265,859
Decommissioning and restoration provision	13	2,100,729	2,100,729
Total liabilities		2,796,968	3,366,588
SHAREHOLDERS' EQUITY
Share capital	14	39,454,039	38,189,779
Warrants reserve	14	4,348,273	3,389,060
Contributed surplus	14	3,376,913	3,206,065
Deficit		(8,580,302)	(7,560,524)
Total shareholders' equity		38,598,923	37,224,380
Total liabilities and shareholders' equity		41,395,891	40,590,968

Nature of operations and going concern (Note 1)

Subsequent events (Note 19)

The accompanying notes are an integral part of these condensed interim financial statements.

NorthX Nickel Corp. (Formerly Archer Exploration Corp.) Condensed Interim Statements of Loss and Comprehensive Loss (Unaudited - Expressed in Canadian dollars)

		Three months ended	Six months ended
		2024	June 30,	2024	June 30,
	Note	2023	2023
Operating expenses		$	$	$	$
	945		1,200
Consulting fees		29,503	69,412
Depreciation	10	1,005	863	2,586	863
Filing fees		44,372	48,940	55,593	63,054
General and administrative		81,217	53,146	109,867	169,500
Management fees	15	200,792	121,876	393,618	240,642
Marketing		58,168	110,879	154,743	246,296
Professional fees		105,490	130,562	197,216	252,650
Rent		-	2,727	-	14,727
Share-based payments	14	87,776	175,831	141,111	359,160
		579,765	674,327	1,055,934	1,416,304
Other income (expenses)		-		-
Amortization of flow through liability	12	936,369	1,585,950
Change in decommissioning and restoration		-	-	-	(116,588)
provision	13	116		736
Gain (loss) on foreign exchange		(1,137)	(1,190)
Interest (expense) recovery		2,328	(84,216)	(9)	(102,606)
Interest income		14,359	64,835	22,429	146,056
Income (loss) before income taxes		(562,962)	241,524	(1,032,778)	95,318
Income taxes		102,000		13,000
Deferred income tax (expense) recovery		(65,000)	(65,000)
Net income (loss) and comprehensive income (loss)		(460,962)	176,524	(1,019,778)	30,318
Basic income (loss) per common share		(0.02)	0.02	(0.05)	0.01
Diluted income (loss) per common share		(0.02)	0.01	(0.05)	0.00
Weighted average number of common shares
outstanding - Basic		25,237,344	15,112,054	22,107,567	15,112,054
Weighted average number of common shares
outstanding - Diluted		25,237,344	15,353,720	22,107,567	15,353,720

The accompanying notes are an integral part of these condensed interim financial statements.

NorthX Nickel Corp. (Formerly Archer Exploration Corp.) Condensed Interim Statements of Cash Flows (Unaudited - Expressed in Canadian dollars)

		Six months ended
	2024	June 30,
	2023
Operating activities:	$	$
(1,019,778)
Net Income (loss) for the period	30,318
Items not affecting cash:	2,586
Depreciation	863
Share-based payments	141,111	359,160
Amortization of flow through liability	-	(1,585,950)
Change in decommissioning and restoration costs	-	116,588
Unrealized foreign exchange loss	-	1,466
Interest expense	-	(2,438)
Deferred income tax expense (recovery)	(13,000)	65,000
Changes in non-cash working capital:	162,707
Receivables	(517,577)
Prepaid expenses	75,423	(403,772)
Trade and other payables	52,791	(147,204)
Other assets	-	(57,500)
Cash used in operating activities	(598,160)	(2,141,046)
Investing activities:	(1,430,773)
Exploration and evaluation costs	(4,189,652)
Asset acquisition costs	-	(77,797)
Purchase of equipment	(12,300)	(11,743)
Decommissioning and restoration costs	(161,164)	(248,769)
Finance assurance for decommissioning and restoration	(481,629)	-
Cash used in investing activities	(2,085,866)	(4,527,961)
Financing activities:	2,275,000
Proceeds from issuance of non-flow-through units	-
Share issuance costs	(84,362)	(1,413)
Cash provided by (used in) financing activities	2,190,638	(1,413)
Change in cash	(493,388)	(6,670,420)
Cash, beginning of period	2,876,128	11,526,348
Cash, end of period	2,382,740	4,855,928
Supplemental cash flow information:	22,429
Cash interest received	146,056
Acquisition costs included in trade and other payables	-	(37,672)
Share-based payments included in exploration and evaluation	(75,571)	-
Change in exploration and evaluation costs included in trade and	449,558	1,007,629
other payables

The accompanying notes are an integral part of these financial statements.

NorthX Nickel Corp. (Formerly Archer Exploration Corp.) Condensed Interim Statements of Changes in Shareholders' Equity (Unaudited - Expressed in Canadian dollars; except number of shares)

						Total
	Common	Share	Warrants	Contributed		shareholders'
	shares	capital	reserve	surplus	Deficit	equity
Balance, October 1, 2022	#	$	$	$	$	$
1,851,848	3,186,256	699,457	414,785	(4,222,989)	77,509
Shares issued on exercise of options	1,111	3,000	-	(1,000)	-	2,000
Issuance of common shares in the Transaction	11,035,212	28,564,545	-	-	-	28,564,545
Shares issued as Finders' fees in the Transaction	275,883	714,114	-	-	-	714,114
Issuance of non-flow-through units in private placement	757,575	1,960,959	1,039,041	-	-	3,000,000
Issuance of flow-through units in private placement	707,222	2,212,521	969,980	-	-	3,182,501
Issuance of charity flow-through units in private placement	483,091	3,337,422	662,577	-	-	3,999,999
Flow-through premium liability	-	(2,231,974)	-	-	-	(2,231,974)
Share issuance costs	-	(655,658)	(80,234)	-	-	(735,892)
Share-based payments	-	-	-	1,230,822	-	1,230,822
Reclassification from reserves to deficit upon the expiration of	-	-	(40,972)	-	40,972	-
warrants
Net loss and comprehensive loss for the period	-	-	-	-	(1,580,141)	(1,580,141)
Balance, June 30, 2023	15,111,942	37,091,185	3,249,849	1,644,607	(5,762,158)	36,223,483
Shares issued for other compensatory awards settled	4,166	12,500	-	(12,500)	-	-
Issuance of non-flow-through units in private placement	1,767,066	500,510	347,682	-	-	848,192
Issuance of flow-through units in private placement	2,083,033	702,112	487,726	-	-	1,189,838
Flow-through premium liability	-	(21,599)	-	-	-	(21,599)
Share issuance costs net of tax	-	(94,929)	(37,711)	-	-	(132,640)
Share-based payments	-	-	-	658,878	-	658,878
Share-based payments - exploration-related	-	-	-	215,622	-	215,622
Reclassification from reserves to deficit upon the	-	-	-	40,972	(40,972)	-
expiration of warrants
Reclassification from reserves to contributed surplus upon the	-	-	(658,486)	658,486	-	-
expiration of warrants
Net loss and comprehensive loss for the period	-	-	-	-	(1,757,394)	(1,757,394)
Balance, December 31, 2023	18,966,207	38,189,779	3,389,060	3,206,065	(7,560,524)	37,224,380
Issuance of non-flow-through units in private placement	9,479,166	1,302,787	972,213	-	-	2,275,000
Share issuance costs net of tax	-	(84,362)	-	-	-	(84,362)
Shares issued for other compensatory awards settled	31,943	45,835	-	(45,835)	-	-
Deferred income tax expense	-	-	(13,000)	-	-	(13,000)
Share-based payments	-	-	-	141,111	-	141,111
Share-based payments - exploration-related	-	-	-	75,572	-	75,572
Net loss and comprehensive loss for the period	-	-	-	-	(1,019,778)	(1,019,778)
Balance, June 30, 2024	28,477,316	39,454,039	4,348,273	3,376,913	(8,580,302)	38,598,923

The accompanying notes are an integral part of these condensed interim financial statements.

NorthX Nickel Corp. (Formerly Archer Exploration Corp.)

Notes to the Condensed Interim Financial Statements

For the three and six months ended June 30, 2024 and 2023 (Unaudited - Expressed in Canadian dollars, except where noted)

1. NATURE OF OPERATIONS AND GOING CONCERN

On May 1, 2024 the company changed its name to NorthX Nickel Corp. (Formerly Archer Exploration Corp.) ("NorthX" or the "Company"). The Company was incorporated under the laws of the Province of British Columbia on October 26, 2018. The Company is focusing on the exploration of mineral claims located in Québec and Ontario, Canada. The Company's registered and records office is located at 1200 Waterfront Centre, 200 Burrard Street, Vancouver, BC V7X 1T2. On February 11, 2021, the shares of the Company began trading on the Canadian Securities Exchange (the "Exchange") under the symbol "RCHR". Effective May 1, 2024, coincident with the name change, the Company commenced trading on the Canadian Securities Exchange under the new trading symbol "NIX".

In August 2023, the Company announced the change in its fiscal year end from September 30 to December 31, effective as of December 31, 2023. Accordingly, for the 2024 reporting year, the Company will report its audited financial statements for the twelve month period ended December 31, 2024, along with its comparative figures for the fifteen month period ended December 31, 2023.

At December 31, 2023 the Company had one wholly owned subsidiary, 1273600 B.C. Ltd. On January 25, 2024 1273600 B.C. Ltd. was dissolved by way of voluntary dissolution under the Business Corporations Act.

Going concern

These unaudited condensed interim financial statements for the three and six months ended June 30, 2024 and 2023 (the "financial statements") have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. There are material uncertainties that may cast significant doubt about the appropriate use of the going concern assumption as the Company is in the exploration and evaluation stage and has not generated any revenues. As at June 30, 2024, the Company has a deficit of $8,682,302 (December 31, 2023 - $7,560,524) and for the six months ended June 30, 2024 and 2023, the Company incurred a net loss of $1,121,778 (2023 - net income of $30,318). The Company's continuing operations as intended are dependent upon the ability to obtain the necessary financing to explore and commercialize its mineral claims and administer overhead expenses. Should the Company fail to commercialize its mineral claims, or raise sufficient financing to maintain operations, the Company may be unable to realize the carrying value of its net assets. These financial statements do not include any adjustments 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. Such adjustments could be material.

Share consolidation

On November 8, 2022, the Company completed a consolidation of its common shares on a three to one basis and on May 1, 2024, the Company completed a consolidation of its common shares on a six to one basis. All share and per share amounts have been retrospectively adjusted to reflect the consolidations. Any references to common shares are on a post-consolidation basis. Numbers of warrants and stock options and their respective exercise prices have been retrospectively adjusted to reflect the effects of the consolidations.

Wallbridge assets acquisition

On July 12, 2022, the Company entered into an asset purchase agreement with Wallbridge Mining Company Limited ("Wallbridge") whereby the Company would acquire from Wallbridge a 100% interest in certain mineral properties located in Québec and Ontario (collectively the "Nickel Assets") in exchange for 11,035,212 common shares of the Company (the "Transaction" or "Wallbridge assets acquisition"). The Company granted Wallbridge a 2% net smelter return ("NSR") royalty less the amount of any pre-existing royalties on encumbered portions of the Grasset Project.

As a condition precedent to the closing of the Transaction, the Company was required to complete an equity financing for gross proceeds of at least $10,000,000. The equity financing closed on November 18, 2022 for gross proceeds of $10,182,500 (Note 14).

NorthX Nickel Corp. (Formerly Archer Exploration Corp.)

Notes to the Condensed Interim Financial Statements

For the three and six months ended June 30, 2024 and 2023 (Unaudited - Expressed in Canadian dollars, except where noted)

2. BASIS OF PREPARATION

Statement of compliance

These condensed interim financial statements were approved by the Board of Directors and authorized for issue on August 21, 2024.

These condensed interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC") applicable to the preparation of interim financial statements including International Accounting Standard 34 Interim Financial Reporting. These condensed interim financial statements do not include all disclosures required for annual audited financial statements. Accordingly, they should be read in conjunction with the notes to the Company's audited financial statements for the years ended December 31, 2023 and September 30, 2022 (the "Annual Financial Statements").

These condensed interim financial statements have been prepared using the historical cost basis, except for certain financial assets and liabilities, which are measured at fair value, as specified by IFRS. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information.

The preparation of these condensed interim financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the period. Actual results could differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Basis of measurement

These financial statements have been prepared using the historical cost basis, except for certain financial assets and liabilities, which are measured at fair value, as specified by IFRS, as well as information presented in the statements of cash flows. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information.

Functional and presentation currency

The functional currency is the currency of the primary economic environment in which an entity operates. The functional currency of the Company is the Canadian dollar. The financial statements are presented in Canadian dollars, except as otherwise noted. References to "USD" are to United States dollars.

Foreign currency translation

Foreign currency transactions are translated into Canadian dollars at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, the monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the rate of exchange at the date of the condensed interim statement of financial position. Realized and unrealized exchange gains and losses are recognized in the condensed interim statements of comprehensive loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Future accounting pronouncements

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after January 1, 2024, none of which had a material impact to the Company. There are no relevant IFRS's or IFRS interpretations that are not yet effective that would be expected to have a material impact on the consolidated financial statements.

NorthX Nickel Corp. (Formerly Archer Exploration Corp.)

Notes to the Condensed Interim Financial Statements

For the three and six months ended June 30, 2024 and 2023 (Unaudited - Expressed in Canadian dollars, except where noted)

3. MATERIAL ACCOUNTING POLICY INFORMATION

In the preparation of these financial statements, the Company used the same accounting policies as in Note 3 to the Annual Financial Statements for the 15 month period ending December 31, 2023.

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, revenues and expenses. Management continually evaluates these judgments, estimates and assumptions based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates and judgments which may cause a material adjustment to the carrying amounts of assets and liabilities. The Company's interim results are not necessarily indicative of its results for a full year. The significant assumptions and estimates applied in the preparation of these financial statements are consistent with those applied and disclosed in Note 4 to the Annual Financial Statements for the fifteen months period ending December 31, 2023.

5. WALLBRIDGE ASSETS ACQUISITION

On November 18, 2022, the Company completed its previously announced Transaction.

As consideration for the Nickel Assets, the Company issued to Wallbridge 11,035,212 common shares at approximately $2.58 per share for an aggregate fair value of $28,564,545. The Company granted to Wallbridge a 2% NSR royalty on production from the Grasset Project (Note 9).

In connection with the Transaction, the Company entered into a finders' fee agreement with two parties. As compensation for the introduction of the Company and Wallbridge, the Company issued to the finders 275,883 common shares at approximately $2.58 per share for an aggregate fair value of $714,114.

The Company incurred $250,696 in legal fees prior to the closing of the Transaction and the amount is allocated as part of the consideration.

The acquisition has been accounted for as an equity-settledshare-based payment transaction within the scope of IFRS 2 Share-basedPayment. The acquisition did not qualify as a business combination under IFRS 3 Business Combinations, as the significant inputs, processes, and outputs that together constitute a business did not exist in the Company or the Nickels Assets at the time of acquisition. Accordingly, no goodwill was recorded with respect to the acquisition.

A summary of the Company's consideration paid and the net assets acquired from Wallbridge as at the November 18, 2022 acquisition date is as follows:

	$
Purchase price:
Fair value of common shares issued to Wallbridge	28,564,545
Fair value of finders' shares	714,114
Transaction costs	250,696
	29,529,355
Net assets acquired:
Cash	2,652,997
Account receivable with Magna	612,230
Exploration and evaluation assets (Note 9)	28,538,141
Property and equipment (Note 10)	87,138
Decommissioning and restoration provision (Note 13)	(2,361,151)
	29,529,355

NorthX Nickel Corp. (Formerly Archer Exploration Corp.)

Notes to the Condensed Interim Financial Statements

For the three and six months ended June 30, 2024 and 2023 (Unaudited - Expressed in Canadian dollars, except where noted)

6. RECEIVABLES

A summary of the Company's receivables is as follows:

		June 30,	December 31,
		2024	2023
		$	$
Input Tax Credits recoverable	72,022	234,729
		72,022	234,729
7.	PREPAID EXPENSES
A summary of the Company's prepaid expenses is as follows:

		June 30,	December 31,
		2024	2023
		$	$
Insurance	17,916	41,456
Vendor prepayments	36,010	87,893
		53,926	129,349
8.	OTHER ASSETS
A summary of the Company's other assets is as follows:

		June 30,	December 31,
		2024	2023
		$	$
Investments	57,500	57,500
Finance assurance for closure plan (Note 13)	481,629	-
		539,129	57,500

This amount represents guaranteed investment certificates held with the bank as collateral for the Company's credit cards issued to key management personnel and reclamation bond. The GICs bears interest at a rate of Prime less 2.9%.