-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WS+ZkOnc8tg4KTzbSdA2g4z/HMJRriQk24H/1APvt405ieJ7JHAaQLuzi/l+yRBg e7Ocvh635yI9/XfcEN5Hhg== 0001165527-10-000333.txt : 20100427 0001165527-10-000333.hdr.sgml : 20100427 20100427163543 ACCESSION NUMBER: 0001165527-10-000333 CONFORMED SUBMISSION TYPE: 20-F PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20091231 FILED AS OF DATE: 20100427 DATE AS OF CHANGE: 20100427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: North American Nickel Inc. CENTRAL INDEX KEY: 0000795800 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 20-F SEC ACT: 1934 Act SEC FILE NUMBER: 000-14740 FILM NUMBER: 10773830 BUSINESS ADDRESS: STREET 1: #208 - 828 HARBOURSIDE DRIVE CITY: N. VANCOUVER STATE: A1 ZIP: V7P 3R9 BUSINESS PHONE: 604-904-8481 MAIL ADDRESS: STREET 1: #208 - 828 HARBOURSIDE DRIVE CITY: N. VANCOUVER STATE: A1 ZIP: V7P 3R9 FORMER COMPANY: FORMER CONFORMED NAME: Widescope Resources Inc. DATE OF NAME CHANGE: 20060714 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL GEMINI TECHNOLOGY INC DATE OF NAME CHANGE: 19940706 20-F 1 g4058.txt FORM 20-F FOR THE YEAR ENDED 12-31-09 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2009 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-14740 North American Nickel Inc. (formerly Widescope Resources Inc.) (Exact name of Registrant as specified in its charter) Province of British Columbia, Canada (Jurisdiction of incorporation or organization) #208 - 828 Harbourside Drive, North Vancouver, British Columbia, Canada V7P 3R9 (Address of principal executive offices) Securities registered or to be registered pursuant to Section 12(b) of the Act. Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- None None Securities registered or to be registered pursuant to Section 12(g) of the Act. Common Shares, no par value Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None Indicate the number of outstanding shares of each of the issuer's classes of capital or common shares as of the close of the period covered by the annual report: 6,113,642 inclusive of the conversion of the outstanding Series 1 Convertible Preferred Shares Indicate by check mark if the registrant is a well-known seasoned issuer. [ ] Yes [X] No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. [ ] Yes [X] No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. [ ] Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer Indicate by check mark which financial statement item the registrant has elected to follow. [X] Item 17 [ ] Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. [ ] Yes [X] No Unless otherwise indicated, all references herein are expressed in Canadian dollars and United States currency is stated as "U.S.$__________." THIS SUBMISSION SHOULD BE CONSIDERED IN CONJUNCTION WITH PREVIOUSLY FILED FORMS 20-F AND 6-K. THE AUDITED FINANCIAL STATEMENTS AND NOTES THERETO ATTACHED ARE AN INTEGRAL PART OF THIS SUBMISSION. ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not required ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not required ITEM 3. KEY INFORMATION A. SELECTED FINANCIAL DATA. The following selected financial data has been extracted from the consolidated financial statements for the last five years prepared pursuant to Canadian generally accepted accounting principles ("GAAP"). Where material differences exist between Canadian and US GAAP, corresponding comparison data has been provided in US GAAP for clarity. North American Nickel Inc. (formerly Widescope Resources Inc.) (the "Company") was incorporated on September 23, 1983. The Company changed its name from Widescope Resources Inc. to North American Nickel Inc. effective April 19, 2010. The Company's principal business activity is the exploration of natural resource properties. Effective April 19, 2010 the Company's shareholders approved a special resolution to reorganize the Company's capital structure by consolidating in a reverse stock split the existing common shares on the basis of each two (2) old shares being equal to one (1) new share and concurrently increasing the authorized capital of the Company from 100,000,000 common shares without par value to an unlimited number of common shares without par value. All references to common shares, stock options, warrants and weighted average number of shares outstanding in this Form 20-F reflect the share consolidation unless otherwise noted. The net effect of the above was to reduce the existing outstanding common shares from 10,883,452 to 5,441,726. The Company has arranged two non-brokered private placements. The first will consist of 10,000,000 post-consolidation shares at $0.05. The second will consist of 10,000,000 post-consolidation units at $0.06. Each unit consists of one post consolidation share and one non-transferrable warrant to purchase an additional post-consolidation common share at $0.10 for 30 months after closing. The warrants may be subject to earlier expiry. Both private placements are expected to close prior to May 15, 2010. 2 North American Nickel Inc. (formerly Widescope Resources Inc.) Selected Financial Data in accordance with United States GAAP (Expressed in Canadian Dollars)
Years Ended December 31, 2009 2008 2007 2006 2005 ---------- ---------- ---------- ---------- ---------- Net operating revenues $ 0 0 0 9,689 0 Loss from continued operations $ (35,773) (59,776) (56,820) (370,305) (54,804) Income from discontinued operations $ N/a N/a N/a N/a N/a Net loss $ (35,773) (59,776) (56,820) (370,350) (54,804) Comprehensive loss $ (11,248) (59,776) (56,820) (370,350) (54,804) Loss per share from continued operations $ (0.02) (0.02) (0.01) (0.03) (0.01) Income per share from discontinued operations $ N/a N/a N/a N/a N/a Income per share after discontinued operations $ N/a N/a N/a N/a N/a Share capital $ 13,649,333 13,649,333 13,649,333 13,649,333 13,499,333 Common shares issued 5,441,726 5,441,726 5,441,726 5,441,726 4,941,726 Weighted average shares outstanding 5,441,726 5,441,726 5,441,726 5,191,726 4,542,045 $ Total assets 83,212 46,312 74,339 110,607 218,438 $ Net assets (liabilities) (102,535) (106,684) (104,642) (44,086) 176,219 Convertible debentures(current $ and long term portions) N/a N/a N/a N/a N/a Cash dividends declared per $ common share 0 0 0 0 0 Exchange rates (Cdn$ to U.S.$) $ period average 0.8757 0.9371 0.9304 0.8818 0.8253 Exchange rates (CDN$ to U.S.$) for most recent six months Period High Period Low ----------- ---------- October 2009 $ 0.9716 0.9221 November 2009 $ 0.9560 0.9282 December 2009 $ 0.9611 0.9334 January 2010 $ 0.9755 0.9384 February 2010 $ 0.9597 0.9316 March 2010 $ 0.9888 0.9596 Exchange rate (CDN$ to U.S.$) April 23, 2010 $ 1.0009
3 B. Not required C. Not required D. RISK FACTORS. The business of the Company entails significant risks, and an investment in the securities of the Company should be considered highly speculative. An investment in the securities of the Company should only be undertaken by persons who have sufficient financial resources to enable them to assume such risks. The following is a general description of all material risks, which can adversely affect the business and in turn the financial results, ultimately affecting the value of an investment the Company. THE COMPANY HAS NO VIABLE COMMERCIAL BUSINESS. Having no viable business it is difficult to determine a price for the common shares. That price must therefore be dependent on the value that each individual buyer and seller place on the future prospects of the company, rather than any objective measurement. This is a very risk position for shareholders, as the majority perception may turn negative and price decline severely. THE COMPANY HAS LIMITED FUNDS. Funds are the fuel needed to drive the company. Should current funds be consumed, and the company not be able to attract more capital, prospects for shareholders would become extremely negative, and shareholder losses will inevitably occur. THERE IS NO ASSURANCE THAT THE COMPANY CAN ACCESS ADDITIONAL CAPITAL. The company will need to demonstrate performance in order to attract additional capital. As the mineral exploration business has a high element of chance associated with it, it is possible that none of the current properties will have any value. The capital markets could perceive this to be a demonstration of poor performance, and be unwilling to provide additional funds. Should this happen, shareholders will incur significant losses. THERE IS NO ASSURANCE THAT THE TRANSACTIONS DISCLOSED HEREIN WILL BE SUCCESSFUL IN ITS QUEST TO FIND A COMMERCIALLY VIABLE QUANTITY OF MINERAL RESOURCES. Unless the company is able to secure other more viable projects, providing better future prospects, buyer interest for common shares will decline severely, resulting in lower prices and significant shareholder losses. THERE IS NO ASSURANCE THAT OTHER PROSPECTIVE MINERAL PROPERTIES OR OTHER ASSETS CAN BE ACQUIRED, AND IF ACQUIRED THAT THE NECESSARY ADDITIONAL CAPITAL CAN BE ATTRACTED. Either of these is possible. Either occurring will have the same inevitable outcome. Demand for the common shares will decline severely, resulting in a drop in trading price, and significant shareholder losses. THE COMPANY HAS A HISTORY OF OPERATING LOSSES AND MAY HAVE OPERATING LOSSES AND A NEGATIVE CASH FLOW IN THE FUTURE. This will mean that additional shares will need to be sold to fund operations. Without a concurrent improvement in future prospects, this will result in supply of stock exceeding demand, and much lower prices. This will cause shareholders to lose money. THE COMPANY'S AUDITORS HAVE INDICATED THAT U.S. REPORTING STANDARDS WOULD REQUIRE THEM TO RAISE A CONCERN ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A GOING CONCERN. Additional capital will need to be raised. This could result in the 4 perception of lowered future prospects, lower demand for the company's common share, lower stock prices, and shareholder losses. THERE CAN BE NO ASSURANCE THAT A LIQUID MARKET WILL DEVELOP FOR THE COMPANY'S SHARES AND THEREFORE NO ASSURANCE THAT SHAREHOLDERS WILL BE ABLE TO SELL THEIR SHARES. Lack of liquidity that prevents shareholders from selling, or limits their abilities to sell, will all too likely lead to significant losses for shareholders. MANAGEMENT HAS LITTLE EXPERTISE IN MINING, WHICH MAY ULTIMATELY CAUSE SHAREHOLDERS TO LOSE MONEY. Management may waste the company's limited capital on worthless properties, or it may do the wrong things with properties that could have value. Either way, the outcome will be the same. Money will have been wasted without any corresponding creation of value. This will cause shareholders to lose patience and lose interest. This could lead to significantly increased selling of shares, driving down the price, and leading to losses for investors. THE COMPANY'S COMMON STOCK IS THINLY TRADED SO IT IS MORE SUSCEPTIBLE TO EXTREME RISES OR DECLINES IN PRICE, AND YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE PRICE PAID. You may have difficulty reselling shares of our common stock, either at or above the price paid, or even at fair market value. The stock market often experiences significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes may cause the market price of our common shares to decline, regardless of how well the company performs. This may be exaggerated by the fact that the shares trade on the over-the-counter bulletin board ("OTCBB"), which is owned and operated by the Financial Industry Regulatory Authority ("FINRA"). Trading on the OTCBB is often extremely sporadic, and subject to manipulation by market-makers, and short sellers. This may cause you to lose money as you may have difficulty selling the shares that you own. THE COMPANY'S COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" REGULATIONS, WHICH ARE LIKELY TO MAKE IT MORE DIFFICULT TO SELL. A "penny stock" is generally a stock trading under $5.00 per share, and not registered on a national securities exchange or quoted on the NASDAQ national market. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. These rules, intended to protect investors, generally have the result of reducing trading in such stocks, restricting the pool of potential investors, and making it more difficult for investors to sell their shares once acquired. Since our common shares are subject to the "penny stock" rules, you may find it more difficult to sell your shares. AS A FOREIGN ISSUER, THE COMPANY IS EXEMPT FROM CERTAIN INFORMATIONAL REQUIREMENTS OF THE EXCHANGE ACT TO WHICH DOMESTIC ISSUERS ARE SUBJECT. As a foreign issuer we are not required to comply with all of the informational requirements of the Exchange Act. As a result, there may be less information concerning our company publicly available than if we were a domestic United States issuer. In addition, our officers, directors, and principal shareholders are exempt from the reporting and short profit provisions of Section 16 of the Exchange Act, and the rules promulgated thereunder. Therefore, our shareholders may not know on a timely basis when our officers, directors, and principal shareholders purchase or sell shares of our common stock. AS A CANADIAN COMPANY WITH MOST ASSETS AND KEY PERSONNEL LOCATED OUTSIDE THE UNITED STATES, YOU MAY HAVE DIFFICULTY IN ACQUIRING UNITED STATES 5 JURISDICTION, OR ENFORCING A UNITED STATES JUDGMENT AGAINST US, OUR KEY PERSONNEL, OR ASSETS. As a Canadian company many of our assets and key personnel, including directors and officers, reside outside the United States. As a result, it may be difficult or impossible for you to effect service of process within the United States upon us or any of our key personnel or to enforce against us or any of our key personnel judgments obtained in United States' courts, including judgments relating to United States federal securities laws. Canadian courts may not permit you to bring an original action in Canada, or recognize or enforce judgments of United States courts obtained against us predicated upon the civil liability provisions of federal securities laws of the United States, or of any state thereof. Furthermore, because many of our assets are located in Canada, it would be extremely difficult to access these assets to satisfy any award entered against us in a United States court. Accordingly, you may have more difficulty in protecting your interests in the face of actions taken by our management, members of our board of directors, or our controlling shareholders than you would otherwise as shareholders of a United States public company. THE COMPANY DOES NOT INTEND TO PAY ANY COMMON STOCK DIVIDENDS IN THE FORESEEABLE FUTURE. We have never declared or paid a dividend on our common stock, and, because we have very limited resources, we do not anticipate declaring or paying any dividends in the foreseeable future. It is unlikely that the holders of our common shares will have an opportunity to profit from anything other than potential appreciation in the value of our common shares. If you require dividend income, you should not rely in an investment in our common shares to provide it. FUTURE ISSUANCES OF COMMON STOCK MAY DEPRESS STOCK PRICES AND DILUTE YOUR INTEREST. We may issue additional shares of our common stock in future financings, or grant stock options to our employees, officers, directors, and consultants under our stock incentive plan. Any such issuances could have the effect of depressing the market price of our common stock, and, in any case, would dilute the percentage ownership interests in our company of our shareholders. In addition we could issue securities having rights, preferences and privileges senior to those of our common shares. This could depress the value of our common shares. ITEM 4. INFORMATION ON THE COMPANY A. HISTORY AND DEVELOPMENT OF THE COMPANY. The Company was incorporated under the laws of the Province of British Columbia, Canada, by filing of Memorandum and Articles of Association on September 20, 1983, under the name Rainbow Resources Ltd. The company's name was changed to Widescope Resources Ltd. on May 1, 1984, and to Gemini Technology Inc. on September 17, 1985. In conjunction with a reverse split of its common shares on a five-old for one-new basis, the Company adopted the name International Gemini Technology Inc effective September 23, 1993. The Company's name was changed to Widescope Resources Inc., effective July 12, 2006. Effective April 19, 2010 the Company's shareholders approved a special resolution to reorganize the Company's capital structure by consolidating in a reverse stock split the existing common shares on the basis of each two (2) old shares being equal to one (1) new share and concurrently increasing the authorized capital of the Company from 100,000,000 common shares without par value to an unlimited number of common shares without par value. Also effective this date the Company's name was changed to North American Nickel Inc. to reflect its new focus. All references to common shares, stock options, warrants and weighted average number of shares outstanding in accompanying financial statements reflect the share consolidation unless otherwise noted. The Company is currently in good standing under the laws of British Columbia. The registered and records office of the Company are located at #1750 - 1185 West Georgia Street, Vancouver, B.C. Canada V6E 4E6 and 6 the Company's principal executive offices are located at #208 - 828 Harbourside Drive North Vancouver, B. C. V7P 3R9, telephone 604-904-8481. During 2004 alternatives in the resource sector were explored. Oil and gas projects were investigated, and one in particular was the subject of considerable attention. Increasing energy prices brought with them increasing expectations on the part of the owners of that project, ultimately causing interest to wane. Precious metals projects continued to be reviewed as the entry cost was deemed to be lower, and expenditures in minerals exploration appeared to be more controllable. Toward the end of 2004, the Directors were contemplating making a proposal on one particular project. A proposal was made on a precious metals mining prospect in 2005. The precious metals prospect wass comprised of some 2800 hectares in the Rice Lake Mining area of the Province of Manitoba, Canada. The property is just over 3 miles from a mine that had produced over 1.3 million ounces of gold before being closed because it became uneconomic at $35 per ounce gold. (This mine has now been reopened.) The company carried out early stage geological and related work during 2005, through an investment in the company owning the mining claims. In 2006 further work was done on the prospect, In accordance with the terms of the agreement with the owners of the prospect the cost of work done effectively resulted in the company acquiring ownership in the company owning the prospect. This, combined with the exercise of an option agreement with one of the owners, results in Widescope now owning just over 65% of the company owning the prospect. In 2007 due to unavailability of qualified personnel no significant work was undertaken on the claims in the Rice Lake Mining area. In 2008, world economic conditions abruptly curtailed access to new capital. No significant work was undertaken in order to preserve the company's limited capital. In April 2010 the Company initiated a series of actions to realign its focus into the field of nickel exploration in the prolific nickel belts around Sudbury, Ontario and Thompson Manitoba. These actions were reported in a news release dated April 6, 2010. B. BUSINESS OVERVIEW In April 2005 the Company entered into a subscription agreement to invest $200,000 into Outback Capital Inc. dba Pinefalls Gold ("PFG") a private Alberta company with certain directors and a principal shareholder of PFG in common with the Company. As of April 23, 2010 the Company's owns 65.42% of the common shares of PFG. The Company has entered into an agreement with an independent third party that will result in it divesting its interest in Outback Capital Inc., and its remaining interest in the Rice Lake properties. Between 2005 and 2008 PFG actively explored for mineral resources on its mining claims in the area of Bissett, Manitoba. The claims are included in the Rice Lake greenstone belt and cover an area of approximately 2800 hectares. The claims are the subject of Qualifying Reports dated May 1, 2006 and June 30, 2004 prepared by Edward Sawitzky, P. Geo. of Arc Metals Ltd. ("Arc"). Arc prepared the report to standards dictated by National Instrument 43-101. Following the recommendations of the May 2006 Qualifying Report - during the summer of 2006 an exploration program was completed under PFG's direction. The primary focus of the work plan was to complete more detailed geological mapping of the claims, stripping of over-burden and grab sampling. Approximately 30 man-days of field work were completed and more than seventy samples were 7 collected and delivered to TSL Laboratories in Saskatoon for assay and analysis. Subsequent to the year-end the Company has received the detailed geologist's maps, data and assay results. Review of these materials plus the detailed report of the activities, findings and recommendations are under review by the Company. This review, and a small amount of professional work represent the total of the progress made in 2007, to some extent due to the inability to attract a geologist to the short work window the Company wanted. Although the Company remains optimistic about the prospect for discovery of a definable mineral resource on its claims in Manitoba in 2009 it decided to option-out its rights to Cougar Further groundwork will be required to elevate the status of the claims to drill-ready. Cautious optimism was gained from the reported success of the local San Gold Corp., in extending existing gold bearing veins and discovering new ones, by deeper drilling below their existing San Antonio mine site. In conducting its business operations, the Company is not dependent on any patented or license processes, technology, industrial, commercial or financial contract or new manufacturing processes. The Company competes with other exploration companies, some of which have greater financial resources and technical facilities, for the acquisition of mineral interests, as well as for the recruitment and retention of qualified employees. Exploration in Manitoba has experienced a dramatic revival in recent years and increased activity is forecast for the future. We compete for qualified employees with other Canadian companies, including Harvest Gold Corp., Grandview Gold Inc., and San Gold Corp. amongst others. With the dramatic and possibly unprecedented contraction of global financial markets experienced in 2008, a tidal wave of qualified people became available. Suddenly, capital became unavailable. Exploration companies everywhere reduced overhead. There is little evidence that this situation is improving. Access to capital eased marginally toward the latter part of 2009 and beyond. More capital became available, and enthusiasm for mining projects increased at much the same time. The latter because of expectations of increased inflation, bringing increased demand for precious metals. And because of the expectation of an increasing demand for base metals from Asia. To focus on the expected increased demand for base metals, the Company has into agreements to acquire rights to four properties in the Sudbury Ontario nickel belt, and one agreement to acquire 100% ownership of another property in the area of the Thompson Manitoba nickel belt. As part of this change in focus, the Company has entered into an arms length agreement to divest of its interest in Outback Capital Inc., and through this, its interest in the Pine Falls Manitoba gold properties. The Company has arranged two non-brokered private placements to finance working capital and the first exploration work at Post Creek and Bell Lake in the Sudbury nickel belt. It has also attracted four new directors, each with significant experience in mineral exploration, to replace three previous directors, and add one additional director. C. ORGANIZATIONAL STRUCTURE. The Company is part of no other group. During the year ended June 30, 2006 Outback Capital Inc. dba Pinefalls Gold ("PFG") a private Alberta corporation became a majority-owned subsidiary of the Company. PFG was incorporated under the Alberta BUSINESS CORPORATIONS ACT on February 6, 2001. The Company has entered into an agreement with an arms length entity that will result in it divesting of its interest in Outback Capital Inc. 8 D. PROPERTY, PLANTS AND EQUIPMENT. The Company's head office and principal facility, which is leased, is located at 828 Harbourside Drive, North Vancouver. The Company through its 65% ownership of PFG, has interests in the fourteen mineral claims referenced above. During April 2009 PFG entered into an Option and Purchase and Sale Agreement with Cougar Minerals Corp. ("Cougar"), whereby Cougar was granted an option to purchase the fourteen remaining Bissett area mineral claims for total consideration of $180,000. Cougar's payments to PFG will be made as follows: $10,000 (paid) and the issuance of 500,000 common shares at an estimated fair value of $25,000 ($0.05 per share) immediately, in consideration of the grant of the option; and upon exercise of the option Cougar may elect to acquire a 100-per-cent interest by payments of further annual purchase payments of $25,000, $50,000 and $70,000 by April 30, 2010, 2011, and 2012, respectively with the subsequent purchase payments secured by a Promissory Note issued by Cougar to PFG. The Company has entered into 4 agreements to acquire rights to the Post Creek, Bell Lake, Woods Creek and Halcyon properties in the Sudbury, Ontario nickel belt; and an agreement to acquire 100% ownership of the high-grade Ni-Cu-PGE South Bay property near Thompson and the large grassroots Thompson North and Cedar Lake properties, which are part of the world-class Thompson Nickel Belt. SUDBURY NICKEL PROPERTIES: POST CREEK: The property is located 35 km east of Sudbury in Norman and Parkin townships and consists of 35 contiguous unpatented mining claims and one isolated claim covering an area of 688 hectares. It is strategically located adjacent to the producing Podolsky copper-nickel-platinum group metal deposit of FNX Mining. The property lies along the extension of the Whistle Offset Dyke Structure which is a major geological control for Ni-Cu-PGM mineralization. This structure hosted the former INCO Whistle Offset copper-nickel-PGM Mine (5.7 million tons grading 0.33% Cu, 0.95% Ni and 3.77 g/t total platinum metals as well as the Podolsky North and Podolsky 2000 copper-precious metal deposits. FNX forecast the production of 372,049 tons of ore at Podolsky yielding 1.8 million pounds of payable nickel, 28.5 million pounds of payable copper and 27,300 ounces of payable platinum, palladium and gold for 2009. Previous operators located the extension of the Whistle Offset Dyke structure on the Post Creek property as a direct result of their geological, geophysical and Mobile Metal Ion geochemical surveys. Drilling on this structure intersected a 0.66 m near solid to solid sulphide zone with 0.48% copper, 0.08% nickel, 53 parts per billion (ppb) palladium, 34 ppb platinum and 20 ppb gold. A rock sample collected along the structure assayed 0.83% Ni, 0.74% Cu, 0.07% Co, 2241 ppb Pt and 1051 ppb Pd. Significant potential for nickel-copper-PGM is demonstrated on the Post Creek property. A NI 43-101 compliant Technical Report has been commissioned, with Dr. Walter Peredery, formerly of INCO, as the author. BELL LAKE: The Bell Lake property is a 256 acre property that covers approximately 1 km of the Mystery Offset Dyke or "MOD". The MOD is interpreted to be an extension of the Worthington Offset Dyke which is a 10-11 km long mineralized structure that extends from the southwest margin of the Sudbury Igneous Complex. Offset Dyke environments are significant hosts to nickel-copper-PGM mineralization in the Sudbury Basin. The Worthington Offset Dyke hosts the past producing Worthington Mine and the Victoria Mine (1.5 million tons of 2.2% copper, 1.5% nickel and 2.3 g/t total precious metals). It is also host to Vale Inco's Totten Mine development (10.1 million tons at 1.5% nickel, 2% copper and 4.8 g/t platinum group metals). Crowflight Minerals AER-Kidd property also occurs within the Worthington Offset. The Bell Lake 9 property is marked by surface exposures of disseminated to near-solid nickel-copper sulphide mineralization with PGM values. The Mystery Offset Dyke offers excellent exploration potential for the discovery of additional nickel-copper-PGM mineralization. Deep-looking ground geophysical technologies and diamond drilling will test the property after detailed geological mapping has been undertaken on the property. HALCYON: The property is located 35 Km NNE of Sudbury in the SE corner of Parkin Twp, and consists of 46 unpatented mining claims. It is readily accessible by paved and all-weather gravel road. Halcyon is adjacent to the Post Creek property and contains the extension of the metallogenetically significant Whistle Offset Structure. It is approximately 2 km north of the producing Podolsky Mine of FNX Mining. Previous operators on the property defined numerous conductive zones based on induced polarization (I.P.) surveys with coincident anomalous soil geochemistry. Base and precious metal mineralization have been found in multiple locations on the property but follow-up work was never done. The former producing Jon Smith Mine (nickel-copper-cobalt-platinum) is situated 1 Km North of the property. WOODS CREEK: The Woods Creek claim block is located in Hyman Township about 50 km west of Sudbury and comprises eight contiguous unpatented mining claims covering 1,264 hectares. The target on the property is disseminated to near-solid nickel-copper-cobalt-PGM mineralization hosted within Nipissing Diabase dykes which cover 50% of the property. This style of mineralization is currently being mined by Ursa Major Minerals at their Shakespeare deposit 15 km southwest of the Woods Creek property. It contains 7,301,000 tons grading 0.37% Ni, 0.39% Cu, 0.024% Co, 0.37 g/t Pt, 0.40 g/t Pd and 0.20 g/t Au. Previous operators defined a number of mineralized zones on the Woods Creek property, but little follow-up exploration was undertaken. The Main Zone prospect is a zone of 10-40% pyrrhotite-chalcopyrite mineralization that assayed 1.22% Cu, 0.95% Ni, 354 ppb combined Pt and Pd and 136 ppb Au. Diamond drilling on this zone intersected a 6.5 m section of gabbro with pyrrhotite and chalcopyrite that assayed up to 1.09% Ni, 0.37% Cu, 301 ppb combined Pt and Pd and 1110 ppm Co (0.11%). The Ravenshill prospect was discovered in 2005 as a result of geological mapping and prospecting. It comprises near solid pyrrhotite and chalcopyrite in brecciated gabbro with assays of 0.66% Ni, 0.90% Cu, 0.09% Co, 68 ppb Pt, 227 ppb Pd and 46 ppb Au. MANITOBA NICKEL PROPERTIES: SOUTH BAY: Exploration was spurred at the South Bay property by the September, 2003 discovery of a zone of high-grade nickel mineralization. The nickel-copper-cobalt platinum group element ("PGE") zone was found in one wall of a new road cut 60 km east of the town of Leaf Rapids, Manitoba. The average grade of eleven samples of near-solid sulphide collected from boulder-sized blast rubble in the road cut exposure is 2.42 % Ni, 0.78 % Cu, 697 ppm Co and 1.32 g/t PGE. The mineralization is sedimentary-rock-hosted and exhibits similar metal characteristics to ores associated with magma-derived nickel deposits that are mined at Thompson and worldwide. Airborne geophysical surveys (VTEM) have been flown over the property and preliminary soil geochemical surveys have been undertaken. THOMPSON NORTH: The property overlies the world class Thompson Nickel Belt ("TNB") where Vale Inco continues to mine nickel-copper-cobalt and platinum group element mineralization hosted within sedimentary and mafic intrusive rocks. Based on research by the Manitoba Geological Survey the northeastern extension of the TNB has been traced through the Thompson North property making the area highly attractive for repetitions of TNB mineralization. Airborne geophysics (VTEM) has been flown over the property and numerous anomalous magnetic and electromagnetic features identified. Follow-up exploration will be based upon ranking and modeling of geophysics and soil geochemical surveys. 10 CEDAR LAKE: The property occupies the southern portion of the Thompson Nickel Belt where previous exploration based on the drill-testing of geophysical anomalies has identified key stratigraphic components that host producing nickel-copper-cobalt and platinum group elements at the Thompson and Pipe Mines of Vale Inco. Nickel mineralization has been intersected in drilling on adjacent Mineral Exploration Licenses. The prospective rock units are overlain by younger carbonate rocks and conceal the TNB in this area. The Company has undertaken airborne geophysical surveys (VTEM) and delineated numerous conductive and magnetic anomalies. These anomalies will be prioritized and drill tested subsequent to soil geochemical surveys. All technical information in this Form 20-F has been reviewed by Dr. Mark Fedikow, PGeo, the qualified person for Widescope under National Instrument 43-101. ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN (SEE ALSO "SELECTED FINANCIAL DATA"). THE CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH CANADIAN GAAP. REFER TO NOTE 11 TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR A DESCRIPTION OF TRANSACTIONS THAT WERE SUBJECT TO MATERIAL MEASUREMENT DIFFERENCES BETWEEN CANADIAN GAAP AND U.S. GAAP UNDER ITEM 17. OVERVIEW With the acquisition of PFG effective June 30, 2006, the Company's primary focus shifted to mineral resource exploration operations rather than acquisitions. The Company charged PFG a modest management fee to offset its reciprocal efforts to coordinate PFG's affairs until control of PFG was acquired. In 2006 PFG was charged $9,000 in management fees. This management function has been largely carried out by the directors and large shareholders, at their own expense. The Company's management team, affiliates and directors have special expertise in the areas of operations, due diligence, financial analysis and corporate finance strategy with respect to emerging growth enterprises. Additionally, the Company retains Dockside Capital Group to provide certain management functions and in so doing can also access its similar expertise. From time-to-time the Company is approached, through referral, to provide these services on a consulting basis. Thus the Company has generated some revenue by providing these services. As these sources of revenue are not core to the Company's focus, the services are not actively marketed. No consulting revenue was earned in 2006, 2007, 2008, or 2009; although $20,000 was earned in 2004. A. OPERATING RESULTS Historically, the Company has shown modest losses for the past several years. These losses result largely from having little or no revenue and minimal operating expenses, rather than having significant operating and overhead expenses. In 2004 the Company elected to sell its passive investment, and this resulted in a loss that was somewhat greater than usual. Prior to the completion of the PFG acquisition, the expenses of the Company were almost completely related to satisfying regulatory requirements, including the annual meeting, financial reporting, communications with shareholders; and seeking and evaluating acquisition prospects for suitability and ability to attract financing. With the June 30, 2006 completion of the PFG acquisition the Company's expenses became more heavily weighted in favor of the exploration work and analysis being carried out on those properties. The Company will continue in the exploration business via the April 2010 agreements to acquire rights to the Post Creek, Bell 11 Lake, Woods Creek and Halcyon properties in the Sudbury, Ontario nickel belt; and the agreement to acquire 100% ownership of the high-grade Ni-Cu-PGE South Bay property near Thompson and the large grassroots Thompson North and Cedar Lake properties, which are part of the Thompson Nickel Belt. As a result of initiatives that were announced on April 6, 2010, activities will shift from the Bissett area and precious metals, to base metals in and around Sudbury Ontario, and Thompson Manitoba. BUSINESS OVERVIEW With the April 2010 entry into base metal exploration North American Nickel is effectively a new company with its first focus on its two key Sudbury properties. The Post Creek property is strategically located adjacent to the producing Podolsky copper-nickel-platinum group metal deposit of FNX Mining. The property lies along the extension of the Whistle Offset dike structure, which is a major geological control for Ni-Cu-PGM mineralization. The Bell Lake property is a 256-acre property that covers approximately one kilometre of the Mystery Offset dike or MOD. The MOD is interpreted to be an extension of the Worthington Offset dike which is a 10- to 11-kilometre-long mineralized structure that extends from the southwest margin of the Sudbury igneous complex. The Company also has rights to explore the Woods Creek and Halcyon properties in the Sudbury area; and has an agreement to acquire 100% ownership to the high-grade Ni-Cu-PGE South Bay property near Thompson and the large grassroots Thompson North and Cedar Lake properties, which are part of the world-class Thompson Nickel Belt in Manitoba. The Company has entered into an agreement with an independent entity to sell Outback Capital Inc., and its remaining interest in this property. This was done in order to prepare for the shift in focus from precious metals to base metals. FLUCTUATIONS IN RESULTS The Company's annual operating results fluctuate, but very little. Revenues at this point are solely derived from consulting activities which are not core to the Company's focus and will fluctuate greatly based upon the Company's receipt of infrequent, third-party referrals for these services. There is no revenue from operations. Expenses fluctuate on the basis of costs for exploration and related activities, and the ever increasing administrative and other costs of complying with the various regulatory requirements of a public company. We expect that these regulatory related expenses will continue to increase due to the upward pressure on professional fees charged to reporting companies, resulting from changes to securities legislation throughout North America. With the April 2010 entry into the arena of base metal exploration the Company expects to report significant additional expenses in the future related to the exploration activities undertaken in the Sudbury area of Ontario and the Thompson Nickel Belt in Manitoba. Following the expected sale of Outback Capital Inc., the Company will have no further expenses related to exploration in the Bissett area. B. LIQUIDITY AND CAPITAL RESOURCES Since the Company is organized in Canada, the Company's December 31, 2009 consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. As at December 31, 2009, the Company had accumulated losses totaling $13,781,986 and a working capital deficit of $102,535. The continuation of the Company is 12 dependent upon the continued financial support of shareholders as well as obtaining additional financing for the current and subsequent resource projects. As noted, these conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustment that might arise from uncertainty. The auditors' report includes an explanatory paragraph disclosing the Company's ability to continue as a going concern. As at December 31, 2009 the Company had cash of $16,515 and a working capital deficit of $102,535. C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC. Not applicable D. TREND INFORMATION The major trends impacting the company and its industry are lack of access to capital, caused by the severe global financial contraction, and the corresponding contraction of demand for most commodities. Only precious metals seem to have continuing and possibly increasing demand. IMPACT OF INFLATION The Company believes that inflation had minimal effect on costs related to its exploration activities in the 12 months ending December 31, 2009. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable to the Company. E. OFF-BALANCE SHEET ARRANGEMENTS Not applicable F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS Not applicable ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES It should be noted that the management discussed below is primarily involved with the Company's current activities. As the Company concludes an acquisition or merger, or embarks on any other type of project, additional personnel with differing areas of expertise will be utilized. Directors are elected annually by a majority vote of the shareholders and hold office until the next general meeting of the shareholders. Officers are appointed by, and serve at the discretion of, the board of directors. The names, place of residence, positions within the Company and the principal occupations of the directors and senior officers of the Company are set out below. 13 A. DIRECTORS AND SENIOR MANAGEMENT. Name, Municipality of Principal Occupation and Residence and Position Position During the with the Corporation Age Past Five Years -------------------- --- --------------- Douglas E. Ford (1) 46 Director since September 10, 1992; West Vancouver, B.C. General Manager of Dockside Capital, a Director private merchant banking and venture capital firm, from 1986 to present. Richard J. Mark 60 CEO & Chairman of VMS Ventures Inc. from North Vancouver, BC 2002 - present, CEO & Chairman of Chairman & Chief Executive Harvest Gold Corporation from 2005 - Officer present President & CEO of Pancontinental Uranium Corp.(formerly Centram Exploration Ltd.) from 2007 - present. John Roozendaal 42 President of VMS Ventures Inc. from 1996 Brandon, MB - present President of Harvest Gold Director Corporation from 2005 - present Mark Fedikow 57 President of Mount Morgan Resources Inc. Winnipeg, MB year - present Director and VP of President & Director Exploration and Technical Services for VMS Ventures Inc. 2008 - present 65 President of Search Minerals Inc. from James Clucas June 2009 - present; Chairman of North Vancouver, BC International Nickel Ventures Corp. from Director August 2009 until March 2009; President & CEO of International Nickel Ventures Corp. from February 2007 until July 2007; President of International Nickel Ventures Corp. from September 2003, until November 2005. Edward D. Ford (1) 74 Director since March 20, 1990; also has Whistler, B.C. devoted a portion of his time to Chief Financial Officer investment activities and as President & Director of Dockside Capital, a private merchant banking and venture capital firm, for more than the last five years; chartered accountant for more than 40 years. - ---------- (1) Edward Ford is the father of Douglas Ford. B. COMPENSATION. Management compensation is determined by the board of directors based on competitive prices for services provided. During the year ended December 31, 2009, directors and officers, including private companies controlled by directors and officers, as a group, were paid a total of $24,000 in management fees and rent. See "Item 7. Major Shareholders and Related Party Transactions" for more detail on fees paid to members of management or to entities owned by them. For the year ended December 31, 2009, the Company paid no compensation to Directors for acting as Directors. The Company does not have any pension or retirement plans, nor does the Company compensate its directors and officers by way of any material bonus or profit sharing plans. Directors, officers, employees and other key personnel of the Company may be compensated by way of stock options. 14 C. BOARD PRACTICES. Pursuant to the provisions of the COMPANY ACT (BC), the Company's directors are elected annually at the regularly schedules annual general meeting of shareholders. Each elected director is elected for a one-year term unless he resigns prior to the expiry of his term. The Company has no arrangements in place for provision of benefits to its directors or upon their termination. The Board has one committee, the Audit Committee, made-up of Messrs. Edward Ford, James Clucas and Douglas Ford. The Audit Committee meets with the auditors annually prior to completion of the audited financial statements and regularly with management during the fiscal year. On May 2, 2006, the Company's board of directors adopted a new charter for the Audit Committee. D. EMPLOYEES. Effective at December 31, 2009 the Company had no salaried employees. E. SHARE OWNERSHIP. A total of ten percent (10%) of the common shares of the Company, outstanding from time to time, are reserved for the issuance of stock options pursuant to the Company's Incentive Stock Option Plan. None were allocated at December 31, 2009. Other information on ownership is contained in the table below. ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS. A. MAJOR SHAREHOLDERS. The following table sets forth certain information regarding beneficial ownership of the Company's shares at December 31, 2009 by (i) each person who is known to own beneficially more than 5% of the Company's outstanding Common Stock, (ii) each of the Company's directors and executive officers and (iii) all current directors and executive officers as a group. The table does not reflect common shares held of record by depositories, but does include currently exercisable options and warrants which are included in the calculation of percentage of class ownership for each individual holder. As of December 31, 2009 there were 5,441,726 common shares issued and outstanding. Each of the listed persons may be reached at the Company's head offices. 15 Name and Address Amount and Nature of Percent of of Beneficial Owner Beneficial Ownership Class - ------------------- -------------------- ----- Principal Holders Not applicable Officers and Directors Edward Ford 2,246,500 (1) 41.3% Douglas Ford 457,000 (2) 8.4% Richard J. Mark 0 John Roozendaal 0 Mark Fedikow 0 James Clucas 0 All Officers and Directors as a Group (6 persons) 2,703,500 49.7% - ---------- (1) Includes 741,500 shares held directly; and 215,000 shares held through Singer Associates Holdings Ltd.; and 215,000 shares held through Arizona Outdoor Specialists Inc.; and 215,000 shares held through BWN Oil Technologies Inc.; and 215,000 shares held through Dockside Capital Group Inc.; and 215,000 shares held through Good Times Enterprises Inc.; and 215,000 shares held through Specialty Holdings Inc.; and 215,000 shares held through Wheels `n Gear Inc. (2) Includes 242,000 shares held directly; and 215,000 shares held through Wink Holdings Ltd. The Company has arranged two non-brokered private placements of common shares. The first will consist of 10,000,000 post-consolidation shares at $0.05. The second will consist of 10,000,000 post-consolidation units at $0.06. Each unit consists of one post consolidation share and one non-transferrable warrant to purchase an additional post-consolidation common share at $0.10 for 30 months after closing. The warrants may be subject to earlier expiry. Both private placements are expected to close prior to May 15, 2010. The closings of the private placements when combined with the share issuances required to complete the acquisition of the Ontario and Manitoba nickel properties will result in new share positions being created that could have an influence on the direction of the Company. The Company knows of no other arrangements which may at a subsequent date result in a change in control of the Company. B. RELATED PARTY TRANSACTIONS. During the fiscal year ended December 31, 2009, directors, officers and companies controlled by them have been engaged in the following transactions with the Company: During the year ended December 31, 2009, a company in which a director has an interest charged the Company $24,000 (2008: $24,000, 2007: $24,000) for rent and management fees. The unpaid portion of these amounts, plus additional advances and other amounts due to directors, aggregating (2009: $143,723, 2008: $118,657) is included in accounts payable and accrued liabilities at December 31, 2009. The above transactions were made on terms as favorable as or more favorable to the Company than those that could be obtained from unaffiliated third parties. 16 C. INTERESTS OF EXPERTS AND COUNSEL Not required ITEM 8. FINANCIAL INFORMATION A. Consolidated Statements and Other Financial Information See Item 17 and our consolidated financial statements and accompanying notes beginning on page F-1 B. SIGNIFICANT CHANGES The Company is not aware of any significant change since December 31, 2009 that is not otherwise reported in this filing. ITEM 9. THE OFFER AND LISTING Effective December 21, 2006 our common shares became quoted on the United States OTC Bulletin Board, under the symbol "WSCRF". The table below sets forth certain information regarding the price history of our common shares. Note this trading data does not take into effect the 2-old for 1-new reverse split effected on April 20, 2010. Period High (USD) Low (USD) ------ ---------- --------- Fiscal year ended December 31, 2007 $0.30 $0.05 Fiscal year ended December 31, 2008 $0.16 $0.06 Fiscal year ended December 31, 2009 $0.25 $0.02 Quarter ended December 31, 2008 $0.06 $0.06 Quarter ended March 31, 2009 $0.06 $0.01 Quarter ended June 30, 2009 $0.02 $0.02 Quarter ended September 30, 2009 $0.02 $0.02 Quarter ended December 31, 2009 $0.25 $0.02 Quarter ended March 31, 2010 $0.05 $0.03 Month ended October 31, 2009 $0.02 $0.02 Month ended November 30, 2009 (1) $0.02 $0.02 Month ended December 31, 2009 $0.25 $0.02 Month ended January 31, 2010 $0.05 $0.05 Month ended February 28, 2010 (1) $0.05 $0.05 Month ended March 31, 2010 $0.03 $0.03 Month ended April 30, 2010 (2) $0.24 $0.03 - ---------- (1) No recorded trades (2) Through April 23, 2010 17 ITEM 10. ADDITIONAL INFORMATION A. SHARE CAPITAL Not required C. MEMORANDUM AND ARTICLES OF ASSOCIATION 1. The Company was incorporated as Rainbow Resources Ltd. September 20 1983 under certificate of incorporation no. 268952 in the Province of British Columbia Canada. The name was changed to Widescope Resources Ltd. May 1 1984, to Gemini Technology Inc. September 13 1985, to International Gemini Technology Inc. September 23 1993, and to Widescope Recources Inc., effective July 12, 2006. The name was subsequemtly changed to North American Nickel Inc., effective April 19, 2010. No objects and purposes are described. 2. If a director has a material interest in a matter subject to a vote, he must declare it and abstain from voting, or have his vote not counted, except for certain specific exclusions which include setting director compensation. There are no restrictions on directors issuing debt however shareholder approval may be required in connection with convertible debt or other debt driven requirements to issue shares. There is no retirement age or share ownership requirement for directors. 3. Dividends are declared by directors and subject to any special rights, paid to all holders of shares in a class according to the number of shares held. Voting rights are one vote per share. Directors stand for election every year at the annual meeting. Shareholders have no rights to share directly in the company's profits. Subject to prior claims of creditors and preferred shareholders, common shareholders participate in any surplus in the event of liquidation according to the number of shares held. The company may redeem shares by directors' resolution in compliance with applicable law unless the company is insolvent or may become insolvent by doing so. It must make its offer pro rata to every member who holds a class, subject to applicable stock exchange rules or company act provisions. The directors have wide discretion. Shareholders have no liability for further capital calls. No discriminatory provisions, against an existing or prospective shareholder of a substantial number of shares, are imposed by the articles. 4. Rights of holders of any class of shares can only be changed with their consent, and in accordance with the company act. Consent must be in writing by the holders or by a three fourths majority of a vote of the holders, and by the consent of the British Columbia Securities Commission. 5. A notice convening an annual general or special meeting must specify the place, date, hour, and in the case of a special meeting, the general nature of the special business, and must be given in accordance with the company act. There are no special conditions outlining rights of admission. 6. There are no limitations on rights to own securities. 7. There are no provisions to delay, defer, or prevent a change in control. 8. Nothing in the articles requires ownership disclosure. 9. Not applicable. 10. Not applicable. D. MATERIAL CONTRACTS The Company entered into a subscription agreement to invest $200,000 into Outback Capital Inc. dba Pinefalls Gold (PFG) a private Alberta Company with certain directors and principal shareholders in common with the Company. PFG is an exploration company with mining claims located in the area of Bissett, Manitoba. The Company will invest $200,000 in exchange for 4 million units at $0.05 per unit, each unit comprised of one common share and one warrant to purchase an additional common share at $0.075 for a period of two years. Prior to exercising the warrants, after making the investment of $200,000 the Company 18 will own approximately 37% of the common shares of PFG. As at December 31, 2005, the Company had invested $90,000 for 1.8 million units, approximately 17% of the outstanding common shares of PFG. In addition the Company entered into an option agreement with one of the principal shareholders of PFG, a director of the Company, which entitles the company to acquire a further 3 million common shares of PFG in exchange for one million common shares of the Company. The option, exercisable at the Company's discretion until March 31, 2007, was exercised. Pursuant to the terms of the subscription agreement and the option agreement, the latter having been exercised, the company owns 65.42% of the common shares of PFG. On April 6, 2009 the company entered into an option agreement with respect to its 14 remaining claims in the Rice Lake area of Manitoba. The option provides Cougar Minerals Corporation, a corporation traded on the Canadian National Stock Exchange (CNSX) to acquire 100% of the company's interest in these claims, and is open for exercise until April 6, 2009. The purchase price is $180,000 with $35,000 paid as a non- refundable deposit. The deposit was paid as to $10,000 cash and 500,000 of Cougar's common shares at a deemed price of $0.05 per share. The Company has entered into an agreement with an independent entity that will result in it divesting of Outback Capital Inc. On April 6, 2010 the Company announced that it had entered into 4 agreements to acquire rights to the Post Creek, Bell Lake, Woods Creek and Halcyon properties in the Sudbury, Ontario nickel belt; and one agreement to acquire 100% ownership of the high-grade Ni-Cu-PGE South Bay property near Thompson and the large grassroots Thompson North and Cedar Lake properties, which are part of the world-class Thompson Nickel Belt. E. EXCHANGE CONTROLS THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND SHOULD NOT BE INTERPRETED AS, LEGAL ADVICE TO ANY PROSPECTIVE PURCHASER. ACCORDINGLY, PROSPECTIVE PURCHASERS OF THE COMPANY'S SHARES SHOULD CONSULT WITH THEIR OWN ADVISORS WITH RESPECT TO THEIR INDIVIDUAL CIRCUMSTANCES. There are no laws or governmental decrees or regulations in Canada that restrict the export or import of capital, or which affect the remittance of dividends, interest or other payments to holders of the Company's securities who are not residents of Canada, other than withholding tax requirements. Reference is made to "Item 7. Taxation". There are no limitations imposed by the laws of Canada, the laws of Alberta or by the charter or other governing documents of the Company on the right of a non-resident to hold or vote common shares of the Company, other than as provided in the Investment Canada Act (the "Investment Act") and the potential requirement for a Competition Act Review. The following summarizes the principal features of the Investment Act and the Competition Act Review for a non-resident who proposes to acquire common shares. This summary is of a general nature only and is not intended to be, nor is it, a substitute for independent advice from an investor's own advisor. This summary does not anticipate statutory or regulatory amendments. 19 THE CANADIAN INVESTMENT ACT The Canadian Investment Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture that is not a "Canadian" as defined in the Investment Act (a "non-Canadian"), unless, after review, the minister responsible for the Investment Act (the "Minister") is satisfied that the investment is likely to be of a net benefit to Canada. Under the Investment Act, a United States citizen qualifies as a "World Trade Organization Investor." Subject to the restrictions noted below, an investment in a Canadian business by a World Trade Organization Investor would be reviewable under the Investment Act only if it is an investment to acquire control of such Canadian business and the value of the assets of the Canadian business as shown on its financial statements is not less than a specified amount, which for 1999 was $184 million. An investment in the shares of a Canadian business by a non-Canadian other than a "World Trade Organization Investor" when the Company is not controlled by a World Trade Organization Investor, would be reviewable under the Investment Act if it is an investment to acquire control of the Canadian business and the value of the assets of the Canadian business as shown on its financial statements is $5 million or more, or if an order for review is made by the federal cabinet on the grounds that the investment relates to Canada's cultural heritage or national identity. The acquisition by a World Trade Organization Investor of control of a Canadian business in any of the following sectors is also subject to review if the value of the assets of the Canadian business exceeds $5 million (as shown on its financial statements): uranium, financial services (except insurance), transportation services and cultural businesses, which include broadcast media (publication, distribution or sale of books, magazines, periodicals, newspapers, music, film and video products and the exhibition of film and video products), television and radio services. As the Company's business does not fall under any of the aforementioned categories, the acquisition of control of the Company, in excess of the $5 million threshold, by a World Trade Organization Investor would not be subject to such review. A non-Canadian would acquire control of the Company for purposes of the Investment Act if the non-Canadian acquired a majority of the common shares. The acquisition of less than a majority but one-third or more of the common shares would be presumed to be an acquisition of control of the Company unless it could be established that, on acquisition, the Company was not controlled in fact by the acquirer through the ownership of common shares. Notwithstanding the review provisions, any transaction involving the acquisition of control of a Canadian business or the establishment of a new business in Canada by a non-Canadian is a notifiable transaction and must be reported to Industry Canada by the non-Canadian making the investment either before or within thirty days after the investment. Certain transactions relating to common shares are exempt from the Investment Act, including: * an acquisition of common shares by a person in the ordinary course of that person's business as a trader or dealer in securities; * an acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Act; and * an acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization, following which the ultimate direct or indirect control in fact of the Company, through the ownership of common shares, remained unchanged. 20 CANADIAN COMPETITION ACT REVIEW Investments giving rise to the acquisition or establishment, directly or indirectly, by one or more persons of control over, or a significant interest in the whole or part of a business of a competitor, supplier, customer or other person are subject to substantive review by Canada's Competition Law Authority, the Director of Investigation and Research (the "Director"). If or when the Director concludes that a merger, whether by purchase or lease of shares or assets, by amalgamation or by combination, or otherwise, prevents or lessens, or is likely to prevent or lessen competition substantially, he may apply as may be necessary to eliminate the substantial lessening or prevention of competition. Such substantive merger review power applies to all mergers, whether or not they meet limits for pre-notification under the Competition Act. In addition to substantive merger review, the Competition Act provides for a pre-notification regime respecting mergers of a certain size. The regime applies in respect of share acquisitions, asset acquisitions, amalgamations and combinations. For ease of reference, this filing refers specifically to share acquisition, although the pre-notification regime applies, with the appropriate modification, to other types of acquisition of control as well. In order for a share acquisition transaction to be pre-notifiable, the parties to the transaction (being the person or persons who proposed to acquire shares, and the corporation the shares of which are to be acquired), together with their affiliates (being all firms with a 50% or more voting shares linkage up and down the chain) must have: (i) aggregate gross assets in Canada that exceed $400,000,000 in value, as shown on their audited financial statements for the most recently completed fiscal year (which must be within the last fifteen (15) months); or (ii) aggregate gross revenue from sales in, from or into Canada that exceed $400,000,000 for the most recently completed fiscal year shown on the said financial statements; and (iii)the party being acquired or corporations controlled by that party must have gross assets in Canada, or gross revenues from sales in or from Canada, exceeding $35,000,000 as shown on the said financial statements. Acquisition of shares carrying up to 20% of the votes of a publicly-traded corporation, or 35% of the votes in a private corporation, will not be subject to pre-notification, regardless of the above thresholds. However, exceeding the 20% or the 35% threshold, and again exceeding the 50% threshold, gives rise to an obligation of notification if the size threshold is met. If a transaction is pre-notifiable, a filing must be made with the Director containing the prescribed information with respect to the parties, and a waiting period (either seven or twenty-one days, depending on whether a long or short form filing is chosen) must expire prior to closing. As an alternative to pre-notification, the Director may grant an Advance Ruling Certificate, which exempts the transaction from pre-notification. Advance Ruling Certificates are granted where the Director concludes, based on the information provided to him, that he would not have sufficient grounds on which to apply to the Competition Tribunal to challenge the Merger. F. TAXATION THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND SHOULD NOT BE INTERPRETED AS, LEGAL OR TAX ADVICE TO ANY PROSPECTIVE PURCHASER OR HOLDER OF THE COMPANY'S SHARES AND NO REPRESENTATION WITH RESPECT TO THE 21 CANADIAN FEDERAL INCOME TAX CONSEQUENCES TO ANY SUCH PROSPECTIVE PURCHASER IS MADE. ACCORDINGLY, PROSPECTIVE PURCHASERS OF THE COMPANY'S SHARES SHOULD CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR INDIVIDUAL CIRCUMSTANCES. The following summary describes the principal Canadian federal income tax considerations generally applicable to a holder of the Company's shares who, for purposes of the Income Tax Act (Canada) (the "Canadian Tax Act") and the Canada-United States Income Tax Convention, 1980 (the "Convention") and at all relevant times is resident in the United States and not resident in Canada, deals at arm's length with the Company, holds the Company's shares as capital property, and does not use or hold and is not deemed to use or hold the Company's shares in or in the course of carrying on business in Canada (a "United States Holder"). This following summary is based upon the current provisions of the Canadian Income Tax Act, the regulations thereunder, all specific proposals to amend the Canadian Tax Act and the regulations announced by the Minister of Finance (Canada) prior to the date hereof and the Company's understanding of the published administrative practices of the Canada Customs and Revenue Agency (formerly Revenue Canada, Customs, Excise and Taxation). This summary does not take into account or anticipate any other changes in the governing law, whether by judicial, governmental or legislative decision or action, nor does it take into account the tax legislation or considerations of any province, territory or non-Canadian jurisdiction (including the United States), which legislation or considerations may differ significantly from those described herein. DISPOSITION OF THE COMPANY'S SHARES In general, a United States shareholder will not be subject to Canadian income tax on capital gains arising on the disposition of the Company's shares, unless such shares are "taxable Canadian property" within the meaning of the Canadian Income Tax Act and no relief is afforded under any applicable tax treaty. The shares of the Company would be taxable Canadian property of a non-resident if at any time during the five-year period immediately preceding a disposition by the non-resident of such shares, not less than 25% of the issued shares of any class or series of all classes of shares of the Company belonged to the non-resident, to persons with whom the non-resident did not deal at arm's length, or to the non-resident and persons with whom the non-resident did not deal at arm's length for purposes of the Canadian Income Tax Act. For this purpose, issued shares include options to acquire such shares (including conversion rights) held by such persons. Under the Convention, a capital gain realized by a resident of the United States will not be subject to Canadian tax unless the value of the shares of the Company is derived principally from real estate (as defined in the Convention) situated in Canada. F. DIVIDENDS AND PAYING AGENTS Not required G. STATEMENT BY EXPERTS Not required H. DOCUMENTS ON DISPLAY All documents referenced in this Form 20-F may be viewed at the offices of the Company during business hours #208 - 828 Harbourside Drive, North Vancouver BC V7P 3R9 Canada, Telephone 604-904-8481. 22 I. SUBSIDIARY INFORMATION As of June 30, 2006 Outback Capital Inc. dba Pinefalls Gold ("PFG") a private Alberta corporation become a majority-owned subsidiary of the Company. PFG was incorporated under the Alberta BUSINESS CORPORATIONS ACT on February 6, 2001. The Company has entered into an agreement with an independent third party whereby this party will acquire Outback Capital Inc. ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES Not required ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES Not applicable ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Not applicable ITEM 15. CONTROLS AND PROCEDURES DISCLOSURE CONTROLS AND PROCEDURES Under the supervision and with the participation of management, including our chief executive officer and the chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2009. Based on this evaluation, our chief executive officer and chief financial officer concluded as of December 31, 2009 that our disclosure controls and procedures were effective. MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with generally accepted accounting principles and includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company's assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that a company's receipts and expenditures are being made only in accordance with authorizations of a company's management and directors, and 23 (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of a company's assets that could have a material effect on the consolidated financial statements. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Management has used the framework set forth in the report entitled Internal Control--Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of the Company's internal control over financial reporting. Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2009. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only our management's report in this annual report on Form 20-F. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting. ITEM 16. A. AUDIT COMMITTEE FINANCIAL EXPERT The company has as its audit committee financial expert Mr. Edward D. Ford who is a Canadian Chartered Accountant. He has held this professional qualification since 1961. During his career Mr. Ford has been an associate, manager and partner of several Canadian professional accounting firms that specialized in audit/assurance, taxation, insolvency and independent business consulting. Additionally he has served as a Chief Financial Officer of several public companies. B. CODE OF ETHICS The Company has adopted a code of ethics applicable to its directors, principal executive officer, principal financial officer, principal accounting procedures, and persons performing similar functions. A copy of the Company's Code of Ethics 24 will be made available to anyone who requests it in writing from the Company's head office. D. PRINCIPAL ACCOUNTING FEES AND SERVICES (A) AUDIT FEES Dale Matheson Carr-Hilton LaBonte, Chartered Accountants ("DMCL") billed the Corporation $17,000 - $19,000 (estimated) for audit fees in the year ended December 31, 2009; $12,000 in 2008, $14,500 in 2007; $13,000 in 2006; $9,000 in 2005; and $6,200 in 2004. The former auditor, Charlton & Company, Chartered Accountants billed $2,675 in 2004. (B) AUDIT RELATED FEES DMCL billed the Company $nil for audit related services in the year ended December 31, 2009; $nil in 2008; $1,000 in 2007; $nil in 2006, $nil in 2005 and $nil in 2004. The former auditor, Charlton & Company, Chartered Accountants billed $nil in 2004. (C) TAX FEES DMCL did not provide the Corporation with any professional services rendered for tax compliance, tax advice and tax planning in the years ended December 31, 2009, 2008, 2007, 2006 and 2005. The former auditor, Charlton & Company, Chartered Accountants billed $nil in 2004. (D) ALL OTHER FEES DMCL did not bill the Corporation for any other products and services in the years ended December 31, 2008, 2007, 2006, 2005 and 2004. The former auditor, Charlton & Company, Chartered Accountants billed $nil in 2004. (E) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES To ensure continuing auditor objectivity and to safeguard the independence of our auditors, our audit committee has determined a framework for the type and authorization of non-audit services which our auditors may provide. The audit committee has adopted policies for the pre-approval of specific services that may be provided by our auditors. The dual objectives of these policies are to ensure that we benefit in a cost effective manner from the cumulative knowledge and experience of our auditors, while also ensuring that the auditors maintain the necessary degree of independence and objectivity. Our audit committee approved the engagement of Dale Matheson Carr-Hilton LaBonte to render audit and non-audit services before they were engaged by us. D. EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Not Applicable E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS Not Applicable 25 ITEM 17. FINANCIAL STATEMENTS The financial statements and notes thereto as required by Item 17 are attached hereto and found immediately after the text of this Registration Statement. The auditors' report of Dale Matheson Carr-Hilton LaBonte LLP, independent registered public accountants, on the audited consolidated financial statements and notes thereto is included immediately preceding the audited consolidated financial statements. Auditors' Report. Consolidated balance sheets as at December 31, 2009 and 2008. Consolidated statements of operations and deficit for the years ended December 31, 2009, 2008 and 2007. Consolidated statements of cash flows for the years ended December 31, 2009, 2008 and 2007. Notes to the consolidated financial statements. ITEM 18. FINANCIAL STATEMENTS Not applicable. See "Item 17. Financial Statements" above. ITEM 19. EXHIBITS Attached hereto are the following exhibits: 10.1 Property Option Agreement - Post Creek 10.2 Property Option Agreement - Bell Lake 10.3 Property Option Agreement - Halcyon 10.4 Property Option Agreement - Woods Creek 10.5 Agreement of Purchase and Sale - Manitoba Properties 10.6 Stock Purchase Agreement - Sale of Outback 12.1 Certification of Chief Executive Officer pursuant to s.302 of the Sarbanes-Oxley Act of 2002 12.2 Certification of Chief Financial Officer pursuant to s.302 of the Sarbanes-Oxley Act of 2002 13.1 Certification of Chief Executive Officer pursuant to s.906 of the Sarbanes-Oxley Act of 2002 13.2 Certification of Chief Financial Officer pursuant to s.906 of the Sarbanes-Oxley Act of 2002 SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. NORTH AMERICAN NICKEL INC (formerly Widescope Resources Inc.) Date: April, 27 2010 By: /s/ Douglas E. Ford --------------------------------------- Name: Douglas E. Ford Title: Director as duly authorized signatory 26 [LETTERHEAD OF DALE MATHESON CARR-HILTON LABONTE LLP CHARTERED ACCOUNTANTS] INDEPENDENT AUDITORS' REPORT To the Shareholders of North American Nickel Inc. (formerly Widescope Resources Inc.) We have audited the consolidated balance sheets of North American Nickel Inc. (formerly Widescope Resources Inc.) as at December 31, 2009 and 2008 and the consolidated statements of operations and comprehensive loss, deficit and accumulated other comprehensive income and cash flows for the years ended December 31, 2009, 2008 and 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2009 and 2008 and the results of its operations and its cash flows for the years ended December 31, 2009, 2008 and 2007 in accordance with Canadian generally accepted accounting principles. /s/ DMCL DALE MATHESON CARR-HILTON LABONTE LLP Chartered Accountants Vancouver, Canada April 23, 2010 COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA -UNITED STATES REPORTING DIFFERENCES In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1 to the financial statements. Our report to the shareholders dated April 23, 2010 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors' report when these are adequately disclosed in the financial statements. /s/ DMCL DALE MATHESON CARR-HILTON LABONTE LLP Chartered Accountants Vancouver, Canada April 23, 2010 F-1 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Consolidated Balance Sheets - --------------------------------------------------------------------------------
December 31, 2009 2008 ------------ ------------ ASSETS Current assets Cash $ 16,515 $ 40,661 Receivables 4,197 4,877 Marketable securities (Note 3) 62,500 -- ------------ ------------ 83,212 45,538 Mineral properties and deferred exploration costs (Note 4) 101,000 205,000 Equipment, net of amortization (Note 5) -- 774 ------------ ------------ $ 184,212 $ 251,312 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable and accrued liabilities (Note 6) $ 185,747 $ 152,996 ------------ ------------ Non-controlling interest (Note 4) 53,249 59,980 ------------ ------------ Shareholders' equity (deficit) Share capital - preferred (Note 7) 604,724 604,724 Share capital - common (Note 7) 13,044,609 13,044,609 Contributed surplus 53,344 53,344 Accumulated other comprehensive income 24,525 -- Deficit (13,781,986) (13,664,341) ------------ ------------ (54,784) 38,336 ------------ ------------ $ 184,212 $ 251,312 ============ ============
Nature and Continuance of Operations (Note 1) Subsequent Events (Note 12) Approved by the Board: "Richard J. Mark" - ---------------------------------- Richard J. Mark "Edward D. Ford" - ---------------------------------- Edward D. Ford The accompanying notes are an integral part of these consolidated financial statements. F-2 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Consolidated Statements of Operations and Comprehensive Loss - --------------------------------------------------------------------------------
Years Ended December 31, 2009 2008 2007 ----------- ----------- ----------- Expenses General and administrative $ 57,635 $ 64,138 $ 58,440 Mineral property and deferred exploration costs - impairment (Note 4) 79,000 145,445 -- ----------- ----------- ----------- Loss before other item 136.635 209,583 58,440 Other item: Write-off of equipment (Note 5) 716 -- -- ----------- ----------- ----------- Loss from operations (137,351) (209,583) (58,440) Non-controlling interest (Note 4) 19,706 8,606 8,681 ----------- ----------- ----------- Net loss $ (117,645) $ (200,977) $ (49,759) ----------- ----------- ----------- Basic and diluted loss per common share $ (0.02) $ (0.04) $ (0.01) Weighted average number of common shares outstanding - basic and diluted 5,441,726 5,441,726 5,441,726 =========== =========== =========== Comprehensive loss Net loss $ (117,645) $ (200,977) $ (49,759) Unrealized gain on marketable securities 24,525 -- -- ----------- ----------- ----------- Comprehensive loss $ (93,120) $ (200,977) $ (49,759) =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. F-3 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Consolidated Statements of Deficit and Accumulated Other Comprehensive Income - --------------------------------------------------------------------------------
Years ended December 31, 2009 2008 2007 ------------ ------------ ------------ Deficit Deficit, beginning of year $(13,664,341) $(13,463,364) $(13,413,605) Net loss (117,645) (200,977) (49,759) ------------ ------------ ------------ Deficit, end of year $(13,781,986) $(13,664,341) $(13,463,364) ============ ============ ============ Accumulated other comprehensive income Balance, beginning of year $ -- $ -- $ -- Unrealized gain on marketable securities 24,525 -- -- ------------ ------------ ------------ Balance, end of year $ 24,525 $ -- $ -- ============ ============ ============
The accompanying notes are an integral part of these consolidated financial statements. F-4 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Consolidated Statements of Cash Flows - --------------------------------------------------------------------------------
Years Ended December 31, 2009 2008 2007 --------- --------- --------- Operating Activities Net loss for the year $(117,645) $(200,977) $ (49,759) Non cash Items: Non-controlling interest (19,706) (8,606) (8,681) Mineral property and deferred exploration impairment 79,000 145,445 -- Amortization 58 331 474 Write-off of equipment 716 -- -- Net change in working capital items: Receivables 680 (1,271) (82) Accounts payable and accrued liabilities 32,751 42,601 32,969 --------- --------- --------- Cash used in operations (24,146) (22,477) (25,079) --------- --------- --------- Investing Activities Mineral property exploration costs, net -- (6,490) (10,797) --------- --------- --------- Cash used in investing activities -- (6,490) (10,797) --------- --------- --------- Net decrease in cash (24,146) (28,967) (35,876) Cash, beginning of year 40,661 69,628 105,504 --------- --------- --------- --------- Cash, end of year $ 16,515 $ 40,661 $ 69,628 ========= ========= ========= Supplemental Cash Flow Information: Cash paid for interest $ -- $ -- $ -- --------- --------- --------- Cash paid for income taxes $ -- $ -- $ -- --------- --------- ---------
The accompanying notes are an integral part of these consolidated financial statements. F-5 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 1. Nature and Continuance of Operations North American Nickel Inc. (formerly Widescope Resources Inc.) (the "Company") was incorporated on September 23, 1983. The Company changed its name from Widescope Resources Inc. to North American Nickel Inc. effective April 19, 2010 (Note 12). The Company's principal business activity is the exploration of natural resource properties. During the year ended December 31, 2009, the Company entered into an agreement to option out certain of its mineral claims and allowed certain other mineral claims to lapse (Note 4). The Company is currently seeking opportunities to acquire other mineral properties or enter into additional mineral property option agreements. Effective April 19, 2010, the Company also consolidated its share capital on a 2:1 basis, whereby each two old shares are equal to one new share and increased its authorized capital from 100,000,000 common shares without par value to an unlimited number of common shares without par value (Note 12). All references to common shares, stock options, warrants and weighted average number of shares outstanding in these consolidated financial statements reflect the share consolidation unless otherwise noted. The Company is ultimately dependent upon the discovery of economically recoverable reserves and future production. Currently, the Company will need additional financing to continue the acquisition, exploration and development of its properties. The recoverability of the carrying value of mineral property assets will be dependent upon future production or proceeds from the disposition. The financial statements have been prepared under the assumption the Company is a going concern. The ability of the Company to continue operations as a going concern is ultimately dependent upon achieving profitable operations. To date, the Company has not generated profitable operations from its resource activities and will need to invest additional funds in carrying out its planned exploration, development and operational activities. As a result, additional losses are anticipated prior to obtaining a level of profitable operations. The Company has a working capital deficit of $102,535 at December 31, 2009 (2008 - $107,458) and has accumulated a deficit of $13,781,986 (2008 - $13,664,341). Management is aware that the Company's future capital requirements will depend on many factors, including costs of exploration and development of the properties, production, if warranted, and competition and global market conditions. The Company's potential recurring operating losses and growing working capital needs may require that it obtain additional capital to operate its business. Management's plan includes continuing to pursue additional sources of financing through the sale of additional common shares and reducing overhead costs. As a result of the implementation of this plan, management expects that the Company will have sufficient capital to fund operations and keep its mineral properties in good standing for the upcoming fiscal year. However, there can be no assurance that capital will be available as necessary to meet these continuing exploration and development costs or, if the capital is available, that it will be on terms acceptable to the Company. The issuances of additional equity securities by the Company may result in a significant dilution in the equity interests of current shareholders. Further discussion of liquidity risk has been disclosed in Notes 9 and 10. 2. Significant Accounting Policies Basis of presentation These financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). Except as indicated in Note 11, they also comply, in all material respects, with United States generally accepted accounting principles ("US GAAP"). Basis of consolidation These financial statements have been prepared on a consolidated basis and include the accounts of the Company and its 65.42% owned subsidiary, Outback Capital Inc. dba Pinefalls Gold ("PFG"). All intercompany balances and transactions have been eliminated on consolidation. F-6 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 2. Significant Accounting Policies cont'd Estimates, assumptions and measurement uncertainty The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. Areas requiring significant use of estimates by management relate to going concern assessments, determining the carrying value of mineral properties, determining the fair values of marketable securities, asset retirement obligations and financial instruments and tax rates used to calculate future income tax balances. Equipment Equipment is recorded at cost. Amortization is calculated using the following annual rate, which is estimated to match the useful lives of the asset: Computer hardware 30% declining balance Mineral properties and deferred exploration costs The cost of mineral properties and related exploration costs are deferred until the properties are placed into production, sold, abandoned or until management has determined that an impairment has occurred. Carrying costs will be amortized over the useful life of the properties following the commencement of commercial production, or written off if the properties are sold abandoned, allowed to lapse, or if management has otherwise determined that the carrying value of a property is not recoverable and should be impaired. Properties acquired under option agreements, whereby payments are made at the sole discretion of the Company, are recorded in the accounts at such time as the payments are made. It is reasonably possible that economically recoverable reserves may not be discovered, and accordingly a material portion of the carrying value of mineral properties and related deferred exploration costs could be written off. Although the Company has taken steps to verify title to mineral properties in which it has an interest, according to the common industry standards for the stage of exploration of such properties, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected title defects. The amounts shown for mineral properties and deferred exploration costs represent costs incurred to date, net of impairments, and do not necessarily represent present or future values which are entirely dependent upon economic production or recovery from disposal. Asset retirement obligations The Company follows the provisions of the Canadian Institute of Chartered Accountants ("CICA") Handbook Section 3110, "Asset Retirement Obligations", which requires the estimated fair value of any asset retirement obligations to be recognized as a liability in the period in which the related environmental or retirement liability can be reasonably established and measured. The present value of the associated future costs when measureable is recorded as a liability and added to the cost of the related property and amortized over the estimated remaining life. As of December 31, 2009 and 2008 the Company has not incurred and is not aware of any significant asset retirement obligations in respect of its mineral exploration properties. F-7 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 2. Significant Accounting Policies cont'd Impairment of long-lived assets The Company follows the recommendations of the CICA Handbook Section 3063, "Impairment of Long-Lived Assets". Section 3063 establishes standards for recognizing, measuring and disclosing impairment of long-lived assets held for use. The Company conducts its impairment test on long-lived assets when events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is recognized when the carrying amount of an asset to be held and used exceeds the undiscounted future net cash flows expected from its use and disposal. If there is impairment, the impairment amount is measured as the amount by which the carrying amount of the asset exceeds its fair value, calculated using expected discounted cash flows when independent or quoted market prices are not available. Financial instruments The Company adopted the CICA Handbook Sections 3855, "Financial Instruments - Recognition and Measurement"; Section 3856, "Hedges"; Section 3862, "Financial Instruments - Disclosures" and Section 3863 "Financial Instruments Presentation". Section 3855 prescribes when a financial instrument is to be recognized on the balance sheet and at what amount. Under Section 3855, financial instruments must be classified into one of five categories: held-for-trading, held-to-maturity, loans and receivables, available-for-sale financial assets, or other financial liabilities. All financial instruments, including derivatives, are measured at the balance sheet date at fair value except for loans and receivables, held-to-maturity investments, and other financial liabilities which are measured at amortized cost. Section 3862 and Section 3863 replace Section 3861, "Disclosure and Presentation" and revise and enhance disclosure requirements while carrying forward presentation requirements. The Company's financial instruments consist of cash, receivables, marketable securities, and accounts payable. Cash is measured at face value, representing fair value and classified is held for trading. Receivables are measured at amortized cost and classified as loans and receivables. Marketable securities are classified as available-for-sale and measured at fair value at each reporting period with fair value being determined by quoted market price of the securities. Unrealized gains and losses from available-for-sale instruments are recognized in other comprehensive income (loss) during the period. Accounts payable are measured at amortized cost and classified as other financial liabilities. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values unless otherwise noted. The Company has determined that it does not have derivatives or embedded derivatives. The Company does not use any hedging instruments. Comprehensive income (loss) Effective January 1, 2007, the Company adopted the CICA Handbook Section 1530, "Comprehensive Income". Comprehensive income (loss) is defined as the change in equity from transactions and other events from non-owner sources. Section 1530 establishes standards for reporting and presenting certain gains and losses not normally included in net income or loss, such as unrealized gains and losses related to available for sale securities and gains and losses resulting from the translation of self-sustaining foreign operations, in a statement of comprehensive income (loss). For all periods presented through December 31, 2008, the Company has no items required to be reported in comprehensive loss. During the current year, the Company recognized in comprehensive income for the period, its proportionate share of an unrealized gain on marketable securities. F-8 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 2. Significant Accounting Policies cont'd Loss per share The loss per share figures are calculated using the weighted average number of shares outstanding during the respective fiscal years on a post-consolidation basis. The calculation of loss per share figures using the treasury stock method considers the potential exercise of outstanding share purchase options and warrants or other contingent issuances to the extent each option, warrant or contingent issuance was dilutive. For all years presented, diluted loss per share is equal to basic loss per share as the potential effects of options, warrants and conversions are anti-dilutive. Income taxes The Company accounts for income taxes using the asset and liability method, whereby future tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the carrying values of the asset and liabilities and their respective income tax bases. Future income tax assets and liabilities are measured using substantively enacted income tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on future income taxes and liabilities of a change in rates is included in operations in the period that includes the substantive enactment date. Where the probability of a realization of a future income tax asset is more likely than not, a valuation allowance is recorded. Stock-based compensation The Company follows the CICA Handbook Section 3870, "Stock-based Compensation and Other Stock-based Payments," which recommends the fair value method of valuing all grants of stock options. The estimated fair value of the stock options is recorded as compensation expense over the vesting period or at the date of grant if the options vest immediately, with the offset recorded in contributed surplus. The fair value of options granted is estimated at the date of grant using the Black-Scholes option pricing model incorporating assumptions regarding risk-free interest rates, dividend yield, volatility factor of the expected market price of the Company's stock, and a weighted average expected life of the options. Any consideration paid on the exercise of stock options is credited to share capital. Accounting changes CICA Handbook Section 1506, "Accounting Changes," establishes criteria for changes in accounting policies, accounting treatment and disclosure regarding changes in accounting policies, estimates and corrections of errors. In particular, this section allows for voluntary changes in accounting policies only when they result in the financial statements providing reliable and more relevant information. This section requires changes in accounting policies to be applied retrospectively unless doing so is impracticable. Capital disclosure CICA Handbook Section 1535 "Capital Disclosure", specifies the disclosure of (i) an entity's objectives, policies and processes for managing capital; (ii) quantitative data about what the entity regards as a capital; (iii) whether the entity has not complied with any capital requirements; and (iv) if it has not complied, the consequences of such noncompliance. The Company has included disclosures recommended by this section in Note 9 to these financial statements. General standards for financial statement presentation In June 2007, the CICA modified section 1400 "General Standards of Financial Statement Presentation" in order to require that management make an assessment of the Company's ability to continue as going concern over a period which is at least, but not limited to, twelve months from the balance sheet date. The Company has included this required disclosure in Note 1 to these financial statements. F-9 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 2. Significant Accounting Policies cont'd Credit risk and the fair value of financial assets and financial liabilities In January 2009, the CICA approved EIC 173, "Credit Risk and the Fair Value of Financial Assets and Liabilities". This guidance clarified that an entity's own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities including derivative instruments. The implementation of the recommendations of this section has not had a material impact on the Company's financial statements. Mining exploration costs In March 2009 the CICA approved EIC 174, "Mining Exploration Costs". The guidance clarified that an enterprise that has initially capitalized exploration costs has an obligation in the current and subsequent accounting periods to test such costs for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The implementation of the recommendations of this new section has not had a material impact on the Company's financial statements. Recent accounting pronouncements International Financial Reporting Standards ("IFRS") In 2006, the Canadian Accounting Standards Board ("AcSB") published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian generally accepted accounting principles with IFRS over an expected five year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada's own generally accepted accounting principles. The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company for the year ended December 31, 2010. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS has not been estimated at this time. Consolidated Financial Statements and Non-controlling Interests In January 2009, the CICA issued Section 1601, "Consolidated Financial Statements", and Section 1602, "Noncontrolling Interests", which together replace the existing Section 1600, "Consolidated Financial Statements", and provide the Canadian equivalent to International Accounting Standard 27, "Consolidated and Separate Financial Statements (January 2008)". The new sections will be applicable to the Company on January 1, 2011. Section 1601 establishes standards for the preparation of consolidated financial statements, and Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. The Company is assessing the impact, if any, of the adoption of these new sections on its consolidated financial statements. Other accounting pronouncements issued by the CICA with future effective dates are either not applicable or are not expected to be significant to the financial statements of the Company. 3. Marketable Securities As at December 31, 2009, PFG held 500,000 shares of Cougar Minerals Corp. ("Cougar"), a company listed on the TSX Venture Exchange (Note 4). At initial recognition, each share was recorded at a fair value of $0.05. As at December 31, 2009 the closing price of Cougar's shares was $0.125 per share with a total fair value of $62,500. The Company classifies the investment as available-for-sale. The Company's portion of the unrealized gain on the shares of Cougar was recorded in other comprehensive income and the remaining portion is included in the balance of non-controlling interest as at December 31, 2009. F-10 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 4. Mineral Properties (a) Pinefalls Gold Property In April 2005, the Company entered into a subscription agreement to invest into PFG, a private Alberta exploration company with mining claims comprising the Pinefalls Gold Property, located in the Bissett area of Manitoba. Pursuant to the completion of the subscription agreement and a share exchange agreement, the Company acquired the net assets of PFG including an interest the Pinefalls Gold Property valued at $319,306. The Company holds a 65.42% interest in PFG, effective June 30, 2006. During the year ended December 31, 2009, certain mineral claims comprising the Pinefalls Gold Property were allowed to lapse, and mineral rights to those claims reverted to the Province of Manitoba. On April 6, 2009 PFG entered into an Option and Purchase and Sale Agreement (the "Agreement") with Cougar whereby Cougar was granted an option to purchase the remaining claims comprising the Pinefalls Gold Property for the following consideration: - $10,000 in cash (received) and 500,000 common shares (received; fair value of $25,000) upon execution of the Agreement; - an additional $25,000 before April 30, 2010; - an additional $50,000 before April 30, 2011; - an additional $70,000 before April 30, 2012. During the year ended December 31, 2009, the Company incurred $Nil (2008 - $6,490) in deferred exploration costs and recorded $79,000 (2008 - $145,445) in impairment provisions on the Pinefalls Gold Property. The basis of the impairment was to reflect the net estimated recoverable value of the Pinefalls Gold Property, based on anticipated future cash flows. The Pinefalls Gold Property is subject to a 2% royalty based on the gross cash proceeds received from the sale of minerals, less the cost of smelting, refining, freight, insurance and other related costs, and the cost of marketing and sale of minerals derived. The royalty will be calculated on a cumulative basis and will be payable in cash by the Company within 180 days of each fiscal year end of the Company. (b) Post Creek and Woods Creek Property On December 23, 2009 the Company executed a letter of intent whereby the Company would have an option to acquire two groups of mineral claims, known as the Post Creek Property and Woods Creek Property, located within the Sudbury Mining District of Ontario. The Company paid a non-refundable deposit of $7,500 and $2,500, respectively, and the terms of an agreement are to be finalized in April 2010. F-11 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 4. Mineral Properties cont'd (c) Mineral properties summary Title to mining properties involves certain inherent risks due to the difficulties of determining the validity of certain claims, as well as the potential for problems arising from the frequently ambiguous conveyance history characteristic of many mining properties. The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties are in good standing. The following expenditures have been incurred on the Company's mineral properties and on deferred exploration:
Pinefalls Gold Post Creek Woods Creek Property Property Property Total -------- -------- -------- ----- Balance as at December 31, 2007 $ 343,955 $ -- $ -- $ 343,955 Geological consulting fees 6,490 -- -- 6,490 --------- --------- --------- --------- 350,445 -- -- 350,445 Impairment provision (145,445) -- -- (145,445) --------- --------- --------- --------- Balance as at December 31, 2008 205,000 -- -- 205,000 Option proceeds received (35,000) -- -- (35,000) Option payment -- 7,500 2,500 10,000 --------- --------- --------- --------- 170,000 7,500 2,500 180,000 Impairment provision (79,000) -- -- (79,000) --------- --------- --------- --------- Balance as at December 31, 2009 $ 91,000 $ 7,500 $ 2,500 $ 101,000 ========= ========= ========= =========
5. Equipment
December 31, 2009 December 31, 2008 ------------------------------------------ -------------------------------- Net Net Accumulated Book Accumulated Book Cost Amortization Disposal Value Cost Amortization Value ---- ------------ -------- ----- ---- ------------ ----- Computer hardware $ 1,579 $ 863 (716) $ -- $ 1,579 $ 805 $ 774 ======= ===== ==== ===== ======= ===== =====
6. Related Party Transactions During the year ended December 31, 2009, a company in which a director has an interest charged the Company $24,000 (2008: $24,000, 2007: $24,000) for rent and management fees. The unpaid portion of these amounts, plus additional advances and other amounts due to directors, aggregating $143,723 (2008: $118,657) is included in accounts payable and accrued liabilities at December 31, 2009. Related party transactions were in the normal course of business and have been recorded at the exchange amount which is the fair value agreed to between the parties. Amounts due to related parties are unsecured, non-interest bearing and without specific terms of repayment. F-12 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 7. Share Capital Effective April 19, 2010 the Company's shareholders approved a special resolution to reorganize the Company's capital structure by consolidating in a reverse stock split the existing common shares on the basis of each two (2) old shares being equal to one (1) new share and concurrently increasing the authorized capital of the Company from 100,000,000 common shares without par value to an unlimited number of common shares without par value. All references to common shares, stock options, warrants and weighted average number of shares outstanding in these financial statements reflect the share consolidation unless otherwise noted. The net effect of the above was to reduce the existing outstanding common shares from 10,883,452 to 5,441,726. a) The authorized capital of the Company comprises an unlimited number of common shares without par value and 100,000,000 Series 1 convertible preferred shares without par value. The rights and restrictions of the preferred shares are as follows: i) dividends shall be paid at the discretion of the directors; ii) the holders of the preferred shares are not entitled to vote except at meetings of the holders of the preferred shares, where they are entitled to one vote for each preferred share held; iii) the shares are convertible at any time; and iv) the number of the common shares to be received on conversion of the preferred shares is to be determined by dividing the conversion value of the share, $1 per share, by $0.90. b) Common shares issued and outstanding
2009 2008 ------------------------- ------------------------- Shares $ Shares $ --------- ---------- --------- ---------- Balance, beginning and end of year 5,441,726 13,044,609 5,441,726 13,044,609 ========= ========== ========= ========== c) Preferred shares issued and outstanding 2009 2008 ------------------------- ------------------------- Shares $ Shares $ --------- ---------- --------- ---------- Balance, beginning and end of year 604,724 604,724 604,724 604,724 d) Warrants 2009 2008 -------- -------- Balance, beginning of year -- 780,166 Expired during the year -- (780,166) -------- -------- Balance, end of year -- -- ======== ========
Each warrant gave the holder the right to purchase one common share of the Company at $0.36 per share on or before the expiry of the warrants on December 5, 2008. e) Stock Options As of December 31, 2009 and 2008, there were no stock options outstanding. F-13 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 8. Income Taxes A reconciliation of income taxes at statutory rates with the reported taxes is as follows:
2009 2008 2007 --------- --------- --------- Loss before income taxes: $ 117,645 $ 200,977 $ 49,759 --------- --------- --------- Statutory rates 31.00% 31.00% 34.12% Expected income tax recovery 36,470 62,303 16,978 Non-controlling interest 3,389 2,668 2,962 Effect of reduction in tax rates (4,227) (25,427) -- Permanent differences and other (4,100) 14,307 (2,962) Expiring losses (10,932) (7,194) -- Increase in valuation allowance (20,600) (46,657) (16,978) --------- --------- --------- Net future income tax recovery $ -- $ -- $ -- ========= ========= ========= The significant components of the Company's future income tax assets are as follows: 2009 2008 --------- --------- Future income tax assets: Non-capital loss carry forward benefit $ 92,000 $ 89,500 Capital losses carried forward 2,000 2,100 Mining properties 56,000 37,800 Valuation allowance (150,000) (129,400) --------- --------- Net future income tax asset $ -- $ -- ========= =========
The Company has approximately $366,000 in non-capital losses that can be offset against taxable income in future years which began expiring at various dates commencing in 2009, and approximately $8,000 in capital losses which may be available to offset future taxable capital gains which can be carried forward indefinitely. The potential future tax benefit of these losses has not been recorded as a full-future tax asset valuation allowance has been provided due to the uncertainty regarding the realization of these losses. The related potential income tax benefits with respect to these items have not been recorded in the accounts. Application and expiration of these carryforward balances are subject to relevant provisions of the Income Tax Act, Canada. 9. Capital Management The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. The properties in which the Company currently has an interest are in the exploration stage; as such the Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Company will spend its existing cash and raise additional amounts as needed. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it F-14 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 9. Capital Management cont'd feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company's approach to capital management during the years ended December 31, 2009 and 2008. The Company is not exposed to externally imposed capital requirements. 10. Risk Factors The Company is engaged primarily in the mineral exploration field and manages related industry risk issues directly. The Company is potentially at risk for environmental reclamation and fluctuations in commodity based market prices associated with resource property interests. Management is of the opinion that the Company addresses environmental risk and compliance in accordance with industry standards and specific project environmental requirements. There is no certainty that all environmental risks and contingencies have been addressed. The Company's risk exposures and the impact on the Company's financial instruments are summarized below: Credit risk The Company's credit risk is primarily attributable to receivables. The Company has no significant concentration of credit risk arising from operations. Receivables include primarily goods and services tax due from the Federal Government of Canada. Management believes that the credit risk concentration with respect to its receivables is remote. Liquidity risk The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet third party liabilities when due. As at December 31, 2009, the Company had a working capital deficit of $102,535 (2008: $107,458). All of the Company's financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms. The Company is dependent on management's ability to raise additional funds so that it can manage its financial obligations. Market risk (a) Interest rate risk The Company has cash balances and no interest-bearing debt therefore, interest rate risk is minimal. (b) Foreign currency risk The Company's functional currency is the Canadian dollar and major purchases are transacted in Canadian dollars: therefore, foreign currency risk is minimal. 11. Reconciliation between Canadian and United States Generally Accepted Accounting Principles These consolidated financial statements have been prepared in accordance with Canadian GAAP, which differs in certain respects from United States generally accepted accounting principles ("US GAAP"). A description of US GAAP and practices prescribed by the US Securities and Exchange Commission ("SEC") that result in material measurement and disclosure differences from Canadian GAAP are summarized as follows: F-15 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 11. Reconciliation between Canadian and United States Generally Accepted Accounting Principles cont'd Consolidated Balance Sheets
December 31, December 31, 2009 2008 --------- --------- Total assets under Canadian GAAP $ 184,212 $ 251,312 (a) Mineral property exploration and acquisition costs expensed under US GAAP (101,000) (205,000) --------- --------- Total assets under US GAAP $ 83,212 $ 46,312 ========= ========= Total liabilities under Canadian and US GAAP $ 185,747 $ 152,996 ========= ========= Non-controlling interest under Canadian GAAP $ 53,249 $ 59,980 (a) Non-controlling interest in mineral property exploration and acquisition costs expensed under US GAAP (31,486) (53,614) --------- --------- Non-controlling interest under US GAAP $ 21,763 $ 6,366 ========= ========= Total shareholders' equity (deficit) under Canadian GAAP $ (54,784) $ 38,336 (a) Mineral property exploration and acquisition costs expensed under US GAAP (101,000) (205,000) (a) Non-controlling interest in mineral property exploration and acquisition costs expensed under US GAAP 31,486 53,614 --------- --------- Total shareholders' equity (deficit) under US GAAP $(124,298) $(113,050) ========= =========
F-16 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 11. Reconciliation between Canadian and United States Generally Accepted Accounting Principles cont'd Consolidated Statements of Operations and Deficit
Year ended Year ended Year ended December 31, December 31, December 31, 2009 2008 2007 --------- --------- --------- Net loss under Canadian GAAP $(117,645) $(200,977) $ (49,759) (a) Mineral property exploration and acquisition costs expensed under US GAAP 69,000 138,955 (10,797) (b) Mineral property option proceeds included in income under US GAAP 35,000 -- -- (a) Non-controlling interest in mineral property exploration and acquisition costs expensed under US GAAP (22,128) 2,246 3,736 --------- --------- --------- Net loss under US GAAP (35,773) (59,776) (56,820) Accumulated other comprehensive income 24,525 -- -- --------- --------- --------- Comprehensive loss - US GAAP $ (11,248) $ (59,776) $ (56,820) ========= ========= ========= Basic and diluted loss per share under US GAAP $ (0.02) $ (0.02) $ (0.01) ========= ========= ========= Consolidated Statements of Cash Flows Year ended Year ended Year ended December 31, December 31, December 31, 2009 2008 2007 --------- --------- --------- Net cash used in operating activities under Canadian GAAP $ (24,146) $ (22,477) $ (25,079) (b) Mineral property acquisition and exploration costs incurred (10,000) (6,490) (10,797) (b) Mineral property option proceeds received in cash 10,000 -- -- --------- --------- --------- Net cash used in operating activities under US GAAP $ (24,146) $ (28,967) $ (35,876) ========= ========= ========= Net cash provided by (used in) investing activities under Canadian GAAP $ -- $ (6,490) $ (10,797) (b) Mineral property acquisition and exploration costs incurred -- 6,490 10,797 --------- --------- --------- Net cash provided by (used in) investing activities under US GAAP $ -- $ -- $ -- ========= ========= ========= Net cash provided by financing activities under Canadian and US GAAP $ -- $ -- $ -- ========= ========= =========
F-17 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 11. Reconciliation between Canadian and United States Generally Accepted Accounting Principles cont'd (a) Interest in unproven mineral properties In accordance with Canadian GAAP, the cost of mineral properties and related exploration and development costs are deferred until the properties are placed into production, sold, abandoned or management has determined there to be impairment. In accordance with US GAAP, mineral property acquisition costs are initially capitalized when incurred and the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Mineral property exploration costs are expensed as incurred until commercially minable deposits are determined to exist within a particular property as cash flows cannot be reasonably estimated prior to such determination. Accordingly, for all periods presented, the Company has expensed all mineral property exploration costs for US GAAP purposes and impaired the property acquisition costs incurred during the period (see Note 4). During 2009, the Company optioned some of its mineral property interest. Under Canadian GAAP, the Company will record the option proceeds against the carrying value of the mineral property while for US GAAP, the Company will record the option proceeds as a recovery of mineral property costs on the statement of operations. (b) Mineral property costs incurred Under Canadian GAAP, cash flows relating to mineral property acquisition and exploration costs and option proceeds received are reported as investing activities. Under US GAAP, these amounts are classified as operating activities. The net cash provided by (used in) operating and investing activities has been adjusted accordingly for all periods presented. (c) Income taxes Under US GAAP, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Under Canadian GAAP, the effect of a change in tax rates is recognized in the period of substantive enactment. The application of this difference under US GAAP does not result in a material difference between future income taxes as recorded under Canadian GAAP. (d) Stock-based compensation The Company has granted stock options to certain directors, employees and consultants. Under Canadian GAAP, prior to 2003, no compensation expense was recorded in connection with the granting of stock options. Under previous US GAAP, the Company accounted for stock-based compensation in respect of stock options granted to directors and employees using the intrinsic value based method. Stock options granted to non-employees were accounted for by applying the fair value method using the Black-Scholes option pricing model. Commencing January 1, 2003, under Canadian GAAP the Company expenses the fair value of all stock options granted. As a result, effective January 1, 2003, there is no material difference between the Company's accounting for stock options under US GAAP versus Canadian GAAP. F-18 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 11. Reconciliation between Canadian and United States Generally Accepted Accounting Principles cont'd (e) Reporting comprehensive income The Company follows the standards for the reporting and presentation of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income equals net income for the year as adjusted for all other non-owner changes in shareholders' equity. The Company recognizes all items under accounting standards as components of comprehensive income to be reported in a financial statement. Effective January 1, 2007, the Company adopted new Canadian GAAP accounting standards issued by the CICA relating to comprehensive income. The new standard has been adopted on a prospective basis with no restatement to prior period financial statements. The new standard substantially harmonizes Canadian GAAP with US GAAP with respect to reporting comprehensive income and loss. During the year, other comprehensive loss recognized is $24,525 (2008 - $Nil, 2007 -$Nil). (f) Recent accounting pronouncements In May 2009, the Financial Accounting Standards Board ("FASB") issued guidance that establishes general standards of accounting for and disclosure of events that occur subsequent to the balance sheet date but before financial statements are issued. The statement defines two types of subsequent events (1) recognized subsequent events, which provide additional evidence about conditions that existed at the balance sheet date, and (2) non-recognized subsequent events, which provide evidence about conditions that did not exist at the balance sheet date, but arose before the financial statements were issued. Recognized subsequent events are required to be recognized in the financial statements, and non-recognized subsequent events are required to be disclosed. The adoption had no material impact on the Company's financial position, results of operations or cash flows. In June 2009, the FASB issued the Accounting Standards Codification (the "Codification"), which establishes a sole source of US authoritative GAAP. The Codification is meant to simplify user access to all authoritative accounting guidance by reorganizing US GAAP pronouncements into approximately ninety accounting topics within a consistent structure; its purpose is not to create new accounting and reporting guidance. The adoption of this guidance did not have an effect on the Company's consolidated results of operations, financial position or cash flows. Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the consolidated financial statements of the Company. 12. Subsequent Events The Company has evaluated subsequent events through the date of filing, and the following events have been identified: (a) Effective April 5, 2010 the Company entered into 4 option agreements to acquire rights to four groups of mineral claims, known as the Post Creek, Bell Lake, Woods Creek and Halcyon properties, located within the Sudbury Mining District of Ontario. In order to acquire 100% working interests in the properties, subject to certain net smelter return royalties ("NSR") and advance royalty payments, the Company agreed to pay cash instalments, issue common shares and incur exploration expenses as follows: F-19 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 12. Subsequent Events cont'd Post-consolidation Exploration Commitment Cash shares expense Property date payment issued incurred -------- ---- ------- ------ -------- Post Creek April 2010 $ 12,500 400,000 N/A April 2011 $ 30,000 300,000 $ 15,000 April 2012 $ 50,000 300,000 $ 15,000 April 2013 $ 50,000 N/A $ 15,000 --------- --------- --------- Totals $ 142,500 1,000,000 $ 45,000 ========= ========= ========= Bell Lake April 2010 $ 25,000 300,000 N/A April 2011 $ 25,000 300,000 N/A April 2012 $ 40,000 400,000 N/A April 2013 $ 40,000 N/A N/A April 2014 $ 80,000 N/A N/A --------- --------- --------- Totals $ 210,000 1,000,000 N/A ========= ========= ========= Halcyon April 2010 $ 15,000 300,000 N/A April 2011 $ 25,000 200,000 $ 22,000 April 2012 $ 35,000 200,000 $ 22,000 April 2013 $ 35,000 N/A $ 22,000 --------- --------- --------- Totals $ 110,000 700,000 $ 66,000 ========= ========= ========= Woods Creek April 2010 $ 7,500 150,000 N/A April 2011 $ 15,000 150,000 $ 24,000 April 2012 $ 20,000 N/A $ 24,000 April 2013 $ 45,000 N/A $ 24,000 --------- --------- --------- Totals $ 87,500 300,000 $ 72,000 ========= ========= ========= (b) Effective April 5, 2010 the Company entered into a Purchase and Sale Agreement to acquire ownership of the South Bay, Thompson North and Cedar Lake properties in Manitoba, subject to a 2% NSR reserved by the vendor, in exchange for a $1,000 cash payment and 6,000,000 post-consolidation common shares valued at $0.06 per share. The agreement is subject to certain conditions precedent and is scheduled to close on or before August 3, 2010. (c) Effective April 19, 2010 the name of the Company was changed from Widescope Resources Inc. to North American Nickel Inc. and the Company's shareholders approved a special resolution to reorganize the Company's capital structure by way of a consolidation, in a reverse stock split, of the existing common shares on the basis of each 2 old shares being equal to 1 new share and concurrently increasing the authorized capital of the Company from 100,000,000 common shares without par value to an unlimited number of common shares without par value. F-20 NORTH AMERICAN NICKEL INC. (formerly Widescope Resources Inc.) Notes to the Consolidated Financial Statements December 31, 2009 - -------------------------------------------------------------------------------- 12. Subsequent Events cont'd (d) The Company's shareholders ratified the adoption of a new stock option plan (the "2010 Stock Option Plan") for insiders, employees and other service providers to the Company. Under the 2010 Stock Option Plan the Company will reserve up to 10% of the issued common shares from time to time on a rolling basis. Under the new plan the Company has reserved up to 3,000,000 post-consolidation common shares for issuance at $0.10 per share for option grants to officers, directors, employees and consultants of the Company. (e) The Company has arranged two non-brokered private placements. The first will consist of 10,000,000 post-consolidation shares at $0.05. The second will consist of 10,000,000 post-consolidation units at $0.06. Each unit consists of one post consolidation share and one non-transferrable warrant to purchase an additional post-consolidation common share at $0.10 for 30 months after closing. The warrants may be subject to earlier expiry. Both private placements are expected to close prior to May 15, 2010. (f) Effective April 7, 2010 the Company has entered into a Stock Purchase Agreement whereby it has agreed to sell its entire interest in Outback to an arms length party for cash consideration equivalent to the calculated book value of the Company's holding at the date of closing, which is expected to be on or before May 10, 2010. F-21 EX-10.1 2 ex10-1.txt PROPERTY OPTION AGREEMENT Exhibit 10.1 PROPERTY OPTION AGREEMENT THIS made and entered into as of the ___ day of __________, 2010. BETWEEN: JOHN AND MARIE BRADY, 1227 Holland Road, Sudbury, Ontario, P3A 3R1; (herein "Optionors") OF THE FIRST PART AND: WIDESCOPE RESOURCES INC., a company having an office at Suite 208-828 Harbourside Drive, North Vancouver, British Columbia, V7P 3R9 (herein "Optionee") OF THE SECOND PART WHEREAS the Optionors have represented that they are the sole beneficial owners in and to those mineral claims in Ontario (the "Claims") as more particularly described in Schedule "A" attached hereto and collectively referred to as the Post Creek and Post Creek East Properties; AND WHEREAS the Optionors, subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof, now wishes to grant to the Optionee the exclusive right and option to acquire an undivided 100% right, title and interest in and to the Claims on the terms and conditions hereinafter set forth; NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises, the mutual covenants herein set forth and the sum of One Dollar ($1.00) of lawful money of Canada now paid by the Optionee to the Optionors (the receipt whereof is hereby acknowledged), the Parties hereto do hereby mutually covenant and agree as follows: 1. Definitions The following words, phrases and expressions shall have the following meanings: (a) "After Acquired Properties" means any and all mineral interests staked, located, granted or acquired by or on behalf of either of the parties hereto during the currency of this Agreement which are located, in whole or in part, within five kilometres of the perimeter of the Claims; -2- (b) "Expenditures" includes all direct or indirect expenses [net of government incentives and net of payments to the Optionors pursuant to Section 4 hereof] of or incidental to Mining Operations provided that such expenses must relate to work on the Claims as is acceptable to the MNDM for the purposes of keeping the Claims in good standing. The certificate of the Controller or other financial officer of the Optionee, together with a statement of Expenditures in reasonable detail shall be prima facie evidence of such Expenditures; (c) "Facilities" means all mines and plants, including without limitation, all pits, shafts, adits, haulageways, raises and other underground workings, and all buildings, plants, facilities, and other structures, fixtures, and improvements, and all other property, whether fixed or moveable, as the same may exist at any time in, or on the Claims and relating to the operator of the Claims as a mine or outside the Claims if for the exclusive benefit of the Claims only; (d) "Force Majeure" means an event beyond the reasonable control of the Optionee that prevents or delays it from conducting the activities contemplated by this Agreement other than the making of payments referred to in Section 0 herein. Such events shall include but not be limited to acts of God, war, insurrection, action or inaction of governmental agencies, inability to obtain any environmental, operating or other permits or approvals, authorizations or consents and inclement weather conditions; (e) "Mineral Products" means the commercial end products derived from operating the Claims as a mine; (f) "Mineral Rights" means the right to all minerals on, in or under the Claims; (g) "Mining Operations" includes: (i) every kind of work done on or with respect to the Claims or the mineral products derived therefrom by or under the direction of the Optionee; and (ii) without limiting the generality of the foregoing, includes the work of assessment, geophysical, geochemical and geological surveys, studies and mapping, investigating, drilling, designing, examining equipping, improving, surveying, shaft sinking, raising, cross-cutting and drifting, searching for, digging, trucking, sampling, working and procuring minerals, ores and metals, in surveying and bringing any mineral claims to lease or patent, in doing all other work usually considered to be prospecting, exploration, development, a feasibility study, mining work, milling, concentration, bonification or ores and concentrates, as well as the separation and extraction of Mineral Products; (h) "MNDM" means the Ontario Ministry of Northern Development and Mines; (i) "Net Smelter Royalty" means that net smelter royalty as defined in Section 0 hereof; -3- (j) "Option" means the option granted by the Optionors to the Optionee to acquire, subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof, an undivided 100% right, title and interest in and to the Claims; (k) "Option Period" means the period from the date hereof to the date at which the Optionee has performed its obligations to acquire its 100% interest in the Claims as set out in Section 0 hereof subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof; and (l) "Claims" means the mineral claims described in Schedule "A" together with such further claims contiguous to the claims described in Schedule "A" as the parties hereto have mutually agreed to be staked so as to become subject to the Option. 2. Headings Any heading, caption or index hereto shall not be used in any way in construing or interpreting any provision hereof. 3. Singular, Plural Whenever the singular or masculine or neuter is used in this Agreement, the same shall be construed as meaning plural or feminine or body politic or corporate or vice versa, as the context so requires. 4. Option The Optionors hereby grant to the Optionee the sole and exclusive right and option (the "Option") to earn a 100% interest in the Claims, subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof, exercisable as follows: (a) the Optionee paying the sum of $12,500 to the Optionors by way of cash and issuing 400,000 common shares of the Optionee to the Optionors forthwith upon execution of this Agreement (the "Execution Date"); (b) on or before that date which is 12 months following the Execution Date the Optionee incurring $15,000 of Expenditures, paying a further $30,000 to the Optionors and issuing to the Optionors a further 300,000 common shares of the Optionee; (c) on or before that date which is 24 months following the Execution Date the Optionee, incurring a further $15,000 of Expenditures, paying a further $50,000 to the Optionors and issuing to the Optionors a further 300,000 common shares of the Optionee; (d) on or before that date which is 36 months following the Execution Date the Optionee incurring a further $15,000 of Expenditures and paying a further $50,000 to the Optionors; and -4- upon the Optionee having satisfied the obligations set forth above, the Optionee shall be deemed to have exercised the Option (the "Exercise Date") and shall be entitled to an undivided 100% right, title and interest in and to the Claims with the full right and authority to equip the Claims for production and operate the Claims as a mine subject to the rights of the Optionors to the Net Smelter Royalty and subject to the obligations under section 10(g) hereof. Always provided that if any of the obligations set forth above are not satisfied on or before the date stipulated, the Optionee shall without losing any rights under this Agreement have a further thirty (30) days to satisfy any such obligation. In connection with the incurring of the Expenditures and as a condition thereof, the Optionee agrees to file with the MNDM all eligible work performed on the Claims within 90 days of the completion of each phase of work. 5. Net Smelter Royalty The transfer of the Mineral Rights by the Optionors is subject to the Optionors retaining a 2.5% Net Smelter Royalty with respect to the production from the Claims having the following attributes: (a) the terms and conditions of the Net Smelter Royalty shall be as set forth in schedule B hereto; (b) the Optionee shall have the right to repurchase sixty percent of the Net Smelter Royalty (1.5%) for $1,500,000 at any time prior to the first anniversary date of the commencement of commercial production on the Claims; and (c) the Optionee shall be obligated to pay advances on the Net Smelter Royalty of $10,000 per annum, payable as to $5,000 on August 1 and February 1 of each year commencing August 1, 2013 which amounts, for greater certainty shall serve to reduce any amounts otherwise payable on account of the Net Smelter Royalty. 6. Transfer of Title Upon execution of this Agreement, the Optionors will deliver or cause to be delivered to the Optionee, a duly executed transfer of the Claims in favour of the Optionee (the "Optionee Transfer") to be held in trust by said solicitors subject to the terms and conditions of this Agreement. The Optionee shall be entitled to record the Optionee Transfer with the appropriate government offices to effect transfer of legal title of the Claims into its own name at any time following the Exercise Date provided that in the event the Optionee Transfer is recorded the Optionors shall be entitled to record notice of their interest in the Net Smelter Royalty. 7. Assignment During the Option Term, no party shall sell, transfer, assign, mortgage, pledge or otherwise encumber its interest in this Agreement or its right or interest in the Claims without the consent of the other parties, such consent to be not unreasonably withheld, provided that any party shall be permitted to assign this Agreement to an "affiliate" or "associate" as those terms are defined in THE -5- BUSINESS CORPORATIONS ACT (British Columbia). It will be a condition of any assignment under this Agreement that such assignee shall agree in writing to be bound by the terms of this Agreement applicable to the assignor. The Optionee shall have the right at any time during the term of this Agreement to relinquish its rights to earn an interest in one or more of the Claims or to reduce the size of one or more of the Claims, in accordance with the laws of Ontario, by providing written notice to the Optionors. Pursuant to any such relinquishment the Claims relinquished shall be returned to the Optionor with sufficient work applied to them such that they are in good standing for a period of twelve (12) months from the date of relinquishment. Following any such relinquishment or reduction in size, the Optionee will have no obligation to incur any further exploration and development expenditures on the portion of the Property relinquished or, in the case of a claims that has been reduced in size, on the portion of such claim that has been dropped. 8. Termination This Agreement shall forthwith terminate in circumstances where: (a) the Optionee fails to make the payments for or carry out the Expenditures required in Sections 0 of this Agreement on or before the dates set out herein provided that, in circumstances where the Optionee is prevented from carrying out any of the Expenditures contemplated in Sections 0 prior to the dates set out therein due to Force Majeure, then the Optionee shall forthwith give the Optionors written notice of the commencement and termination of the said Force Majeure and thereafter such dates shall be deemed to have been extended by the period of time during which the Force Majeure remains in effect; (b) the Optionee gives 3 months notice of termination to the Optionors which it shall be at liberty to do at any time after the execution of this Agreement and the payment of the amount set forth in clause 0 hereof; (c) this Agreement is terminated in accordance with the provisions of section 0 herein; or (d) the parties mutually agree in writing; and in circumstances where this Agreement terminates prior to the Exercise Date the Optionee shall execute all such documents and do all such things as necessary to transfer legal title to the Claims back to the Optionors. 9. Representations, Warranties and Covenants of the Optionors The Optionors jointly represent, warrant and covenant to and with the Optionee as follows: (a) neither the execution and delivery of this Agreement, nor any of the agreements referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with, -6- result in the breach of or accelerate the performance required by, any agreement to which they are a party; (b) the Claims are accurately described in Schedule "A", are in good standing under the laws of the jurisdiction in which it is located and are free and clear of all liens, charges and encumbrances other than those of which the Optionee has been advised in writing; (c) the Claims have been operated substantially in accordance with all applicable and environmental laws and, to the knowledge of the Optionors there are no environmental conditions existing on the Claims to which any material remedial action is required or any material liability has or may be imposed under applicable environmental law; (d) the Optionors are the sole beneficial owners of the Claims and have the exclusive right to enter into this Agreement and all necessary authority to transfer their interest in the Claims in accordance with the terms of this Agreement; (e) no person, firm or corporation has any proprietary or possessory interest in the Claims other than the Optionors, and no person, firm or corporation is entitled to any royalty or other payment in the nature of rent or royalty on any minerals, ores, metals or concentrates or any other such products removed from the Claims; (f) upon request by the Optionee, and at the sole cost of the Optionee, the Optionors shall deliver or cause to be delivered to the Optionee copies of all available maps and other documents and data in their possession respecting the Claims; and (g) during the currency of this Agreement, the Optionors will: (i) not do any act or thing which would or might in any way adversely affect the rights of the Optionee hereunder; (ii) not relinquish or abandon all or any part of their interest in the Claims; (iii)not mortgage, pledge or encumber the Claims after the Effective Date without the Optionee's prior written consent; and (iv) give the Optionee such access to the Property, at all times at its own risk and expense, as the Optionee shall determine, acting reasonably, is necessary to enable it to carry out the terms of this Agreement. 10. Representations, Warranties and Covenants of the Optionee The Optionee represents, warrants and covenants to and with the Optionors that: (a) the Optionee is a company duly organized validly existing and in good standing under the laws of the Province of British Columbia; -7- (b) the Optionee has full power and authority to carry on its business and to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement; (c) neither the execution and delivery of this Agreement, nor any of the agreements referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with, result in the breach of or accelerate the performance required by, any agreement to which it is a party; (d) the execution and delivery of this Agreement and the agreements contemplated hereby will not violate or result in the breach of the laws of any jurisdiction applicable or pertaining thereto or of its constating documents; (e) this Agreement constitutes a legal, valid and binding obligation of the Optionee; (f) the Optionee shall use its reasonable best efforts to limit the resale restrictions to which the common shares of the Optionee issuable to the Optionors pursuant to Section 0 hereof would be subject to the minimum restrictions provided for under applicable securities laws; (g) both during and after the Option Period, the Optionee will keep the Claims in good standing, free and clear of all liens, charges and encumbrances and in connection therewith shall make all such payments, including, but not limited to taxes and filing fees as shall be necessary and including meeting all of the MNDM minimum yearly assessment work requirements and qualified expenditures thereof in order to keep the Claims in good standing, failing which the Optionee shall take all such steps as shall be necessary to reconvey the Claims to the Optionors; and (h) the Optionee will carry out all Mining Operations on the Claims in a miner-like fashion and will obtain all licenses and permits as shall be necessary to enable it to carry out the terms of this Agreement. 11. Indemnity and Survival of Representations The representations and warranties hereinbefore set out are conditions on which the parties have relied in entering into this Agreement and shall survive the acquisition of any interest in the Claims by the Optionee and each of the parties will indemnify and save the other harmless from all loss, damage, costs, actions and suits arising out of or in connection with any breach of any representation, warranty, covenant, agreement or condition made by them and contained in this Agreement. The Optionee agrees to indemnify and save harmless the Optionors from any liability to which it may be subject arising from any Mining Operations carried out by the Optionee or at is direction on the Claims. -8- 12. Confidentiality The parties hereto agree to hold in confidence all information obtained in confidence in respect of the Claims or otherwise in connection with this Agreement other than in circumstances where a party has an obligation to disclose such information in accordance with applicable securities legislation, in which case such disclosure shall only be made after consultation with the other party. 13. Notice All notices, consents, demands and requests (in this Section 0 called the "Communication") required or permitted to be given under this Agreement shall be in writing and may be delivered personally sent by telegram, by telex or telecopier or other electronic means or may be forwarded by first class prepaid registered mail to the parties at their addresses first above written. Any Communication delivered personally or sent by telegram, telex or telecopier or other electronic means shall be deemed to have been given and received on the second business day next following the date of sending. Any Communication mailed as aforesaid shall be deemed to have been given and received on the fifth business day following the date it is posted, addressed to the parties at their addresses first above written or to such other address or addresses as either party may from time to time specify by notice to the other; provided, however, that if there shall be a mail strike, slowdown or other labour dispute which might affect delivery of the Communication by mail, then the Communication shall be effective only if actually delivered. 14. Further Assurances Each of the parties to this Agreement shall from time to time and at all times do all such further acts and execute and deliver all further deeds and documents as shall be reasonably required in order fully to perform and carry out the terms of this Agreement. 15. Entire Agreement The parties hereto acknowledge that they have expressed herein the entire understanding and obligation of this Agreement and it is expressly understood and agreed that no implied covenant, condition, term or reservation, shall be read into this Agreement relating to or concerning any matter or operation provided for herein. 16. Proper Law and Arbitration This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein. The parties hereto hereby irrevocably attorn to the jurisdiction of the Courts of British Columbia. All disputes arising out of or in connection with this Agreement, or in respect of any defined legal relationship associated therewith or derived therefrom, shall be referred to and finally resolved by a sole arbitrator by arbitration under the rules of THE ARBITRATION ACT of British Columbia. -9- 17. Enurement This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. 18. After Acquired Properties The parties covenant and agree, each with the other, that any and all After Acquired Properties shall be subject to the terms and conditions of this Agreement and shall, subject to the provisions hereof, be added to and deemed, for the purposes hereof, to be included in the Claims. In this regard any costs incurred by the Optionee in staking, locating, recording or otherwise acquiring any "After Acquired Properties" will be borne by the Optionee. In circumstances where the Optionors stake, locate, record or otherwise acquire any "After Acquired Properties" they shall so notify the Optionee and, provided that the Optionee reimburses the Optionors for all actual costs related thereto, as set forth by the Optionors in writing, such After Acquired Properties shall be added to and deemed, for the purposes hereof, to be included in the Claims. 19. Excess Work Credits It is acknowledged that there may be excess work credits (the "Excess Credits") on file with MNDM in relation to the Claims as at the date hereof and in such case it is acknowledged and agreed that the Optionors retain title to such Excess Credits and may remove or use them as they in their sole discretion may decide; provided that in removing or using such Excess Credits the Optionors shall always ensure that sufficient Excess Credits remain in place to ensure that the Claims remain in good standing for a period of 12 months from the date of such removal or use. 20. Default Notwithstanding anything in this Agreement to the contrary if any party (a "Defaulting Party") is in default of any requirement herein set forth the party affected by such default shall give written notice to the Defaulting Party specifying the default and the Defaulting Party shall not lose any rights under this Agreement, unless thirty (30) days after the giving of notice of default by the affected party the Defaulting Party has failed to take reasonable steps to cure the default by the appropriate performance and if the Defaulting Party fails within such period to take reasonable steps to cure any such default, the affected party shall be entitled to seek any remedy it may have on account of such default including, without limiting, termination of this Agreement. 21. Technical Data In circumstances where this Agreement is terminated prior to the Exercise Date, the Optionee shall deliver over to the Optionors all technical data and other documents and information then in its possession respecting the Claims and the Mineral Rights. -10- 22. Payment All references to monies hereunder shall be in Canadian funds. 23. Option Only This is an option only and except as herein specifically provided otherwise, nothing herein contained shall be construed as obligating the Optionee to do any acts or make any payments hereunder, and any act or acts or payment or payments as shall be made hereunder shall not be construed as obligating the Optionee to do any further act or make any further payment or payments. 24. Supersedes Previous Agreements This Agreement supersedes and replaces all previous oral or written agreements, memoranda, correspondence or other communications between the parties hereto relating to the subject matter hereof. -11- IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement effective as of the ____ day of _______________, 2010. WIDESCOPE RESOURCES INC. Per: --------------------------------------- Authorized Signatory - ------------------------------------------- JOHN BRADY - ------------------------------------------- MARIE BRADY SCHEDULE "A" CLAIMS LIST FOR POST CREEK AND POST CREEK EAST
Township/ Claim Recording Claim Due Work Total Area Number Date Date Required Reserve - ---- ------ ---- ---- -------- ------- SCHEDULE A FOR POST CREEK: Held by BRADY, JOHN GREGORY (100.00%) NORMAN 854182 Aug 19, 1985 Aug 19, 2015 400.00 9,788.00 NORMAN 854183 Aug 19, 1985 Aug 19, 2015 400.00 -- NORMAN 854184 Aug 19, 1985 Aug 19, 2015 400.00 470.00 NORMAN 854185 Aug 19, 1985 Aug 19, 2015 400.00 -- NORMAN 854186 Aug 19, 1985 Aug 19, 2015 400.00 -- PARKIN 854571 Nov 25, 1985 Nov 25, 2015 400.00 -- PARKIN 854572 Nov 25, 1985 Nov 25, 2015 400.00 2,594.00 NORMAN 854573 Nov 25, 1985 Nov 25, 2014 282.00 10,964.00 PARKIN 854574 Nov 25, 1985 Nov 25, 2015 400.00 -- NORMAN 864654 Nov 25, 1985 Nov 25, 2015 400.00 -- NORMAN 864655 Nov 25, 1985 Nov 25, 2015 400.00 -- NORMAN 864656 Nov 25, 1985 Nov 25, 2015 400.00 -- NORMAN 894711 May 08, 1986 May 08, 2015 400.00 -- NORMAN 894712 May 08, 1986 May 08, 2015 400.00 -- NORMAN 894713 May 08, 1986 May 08, 2015 400.00 -- NORMAN 894746 May 08, 1986 May 08, 2015 400.00 -- NORMAN 894747 May 08, 1986 May 08, 2015 400.00 -- NORMAN 894748 May 08, 1986 May 08, 2015 400.00 23,470.00 NORMAN 1094824 Apr 24, 1990 Apr 24, 2015 400.00 -- NORMAN 1094825 Apr 24, 1990 Apr 24, 2015 400.00 -- NORMAN 1094826 Apr 24, 1990 Apr 24, 2015 400.00 111,140.00 NORMAN 1094834 Apr 24, 1990 Apr 24, 2015 400.00 -- NORMAN 1094835 Apr 24, 1990 Apr 24, 2015 400.00 -- NORMAN 1198500 Jun 27, 1995 Jun 27, 2015 400.00 -- Total Post Creek: 24 $9,482.00 $158,426.00 Township/ Claim Recording Claim Due Work Total Area Number Date Date Required Reserve - ---- ------ ---- ---- -------- ------- SCHEDULE A FOR POST CREEK EAST: Held by BRADY, JOHN GREGORY (100.00%) NORMAN 1117878 Jan 25, 1991 Jan 25, 2015 400.00 -- NORMAN 1117879 Jan 25, 1991 Jan 25, 2015 400.00 -- NORMAN 1117880 Jan 25, 1991 Jan 25, 2015 400.00 -- NORMAN 1117881 Jan 25, 1991 Jan 25, 2015 400.00 -- NORMAN 1117882 Jan 25, 1991 Jan 25, 2015 400.00 -- NORMAN 1222817 Mar 13, 1997 Mar 13, 2015 1,600.00 -- NORMAN 1222896 Mar 13, 1997 Mar 13, 2015 400.00 -- NORMAN 1222897 Mar 13, 1997 Mar 13, 2015 400.00 -- Total Post Creek East: 8 $4,400.00 $ --
SCHEDULE "B" TO THAT OPTION AGREEMENT BETWEEN JOHN AND MARIE BRADY AND WIDESCOPE RESOURCES INC. DATED ____________ ____, 2010 (THE "OPTION AGREEMENT") NET SMELTER ROYALTY TERMS AND CONDITIONS 1. The Net Smelter Royalty shall be equal to 2.5% Net Smelter Returns (as hereinafter defined) (subject to adjustment in accordance with section 5 of the Option Agreement) from any mine in production or put into production as a result of commencing commercial production on The Claims. 2. "Net Smelter Returns" means: (a) the actual proceeds received by the Optionee from any mint, smelter, refinery or other purchaser from the sale of ores, minerals, mineral substances, metals (including bullion) or concentrates (collectively "Product") produced from the Claims and sold or proceeds received from an insurer in respect of Product, after deducting from such proceeds the following charges to the extent that they were not deducted by the purchaser in computing payments: (i) smelting and refining charges; (ii) penalties, smelter assay costs and umpire assay costs; (iii)cost of freight and handling of ores, metals or concentrates from the Claims to any mint, smelter, refinery, or other purchaser; (iv) marketing costs; (v) costs of insurance in respect of Product; (vi) customs duties, severance tax, royalties, ad valorem or mineral taxes or the like and export and import taxes or tariffs payable in respect of the Product; and (b) if the Optionee is not the operator but holds a net smelter return royalty, the same as the net smelter return royalty held by the Optionee. 3. The Net Smelter Royalty will be: (a) calculated and paid on a quarterly basis within 45 days after the end of each quarter of the fiscal year for the mine (an "Operating Year"), based on the Net Smelter Returns for such quarter; -2- (b) each payment of Net Smelter Royalty will be accompanied by an unaudited statement indicating the calculation of the Royalty hereunder in reasonable detail and the Holder will receive, within three months of the end of each Operating Year, an annual summary unaudited statement (an "Annual Statement") showing in reasonable detail the calculation of the Royalty for the last completed Operating Year and showing all credits and deductions added to or deducted from the amount due to the Holder; (c) the holder (the "Holder") of the Net Smelter Royalty will have 45 days from the time of receipt of the Annual Statement to question the accuracy thereof in writing and, failing such objection, the Annual Statement will be deemed to be correct and unimpeachable thereafter; (d) if the Annual Statement is questioned by the Holder, and if such questions cannot be resolved between the Optionee and the Holder, the Holder will have 12 months from the time of receipt of the Annual Statement to have such audited, which will initially be at the expense of the Holder; (e) the audited Annual Statement will be final and determinative of the calculation of the Royalty for the audited period and will be binding on the parties and any overpayment of Royalty will be deducted by the Optionee from the next payment of Royalty and any underpayment of Royalty will be paid forthwith by the Optionee; (f) the costs of the audit will be borne by the Holder if the Annual Statement was accurate within 1% or overstated the Royalty payable by greater than 1% and will be borne by the Optionee if such statement understated the Royalty payable by greater than 1%. If the Optionee is obligated to pay for the audit it will forthwith reimburse the Holder for any of the audit costs which it had paid; (g) the Holder will be entitled to examine, on reasonable notice and during normal business hours, such books and records as are reasonably necessary to verify the payment of the Royalty to it from time to time, provided however that such examination shall not unreasonably interfere with or hinder the Optionee's operations or procedures; and (h) if the Optionee's interest in the Claims is a Net Smelter Return royalty, the Optionee's accounting and reporting obligations to the Holder under this paragraph 3 will be limited to the delivery of such documentation as the Optionee receives from the operator of the Claims in respect of the payment by such operator of Net Smelter Returns to the Optionee. 4. Notwithstanding the provisions of section 3 hereof, the Optionee shall pay advances on account of the Net Smelter Royalty in the amount of $5,000 per annum, payable semi-annually on August 1 and February 1 of each year, commencing as of August 1, 2013, which amounts when paid shall serve to reduce any amounts otherwise payable under section 3 hereof. 5. The determination of the Royalty hereunder is based on the premise that production will be developed solely from the Claims. If the Claims and one or more other properties are incorporated in a single mining project and metals, ores or concentrates pertaining to each are not readily segregated on a practical or equitable basis, the allocation of actual proceeds received and -3- deductions therefrom will be negotiated between the parties and, if the parties fail to agree on such allocation, such will be referred to arbitration pursuant to paragraph 5 of this Agreement. In such arbitration the arbitrator will make reference to this Agreement and to practices used in mining operations that are of a similar nature. The arbitrator will be entitled to retain such independent mining consultants as he considers necessary. The decision of the arbitrator will be final and binding on the parties. 6. Any matters in this Agreement which are to be settled by arbitration will be subject to the following: (a) any matter required or permitted to be referred to arbitration pursuant to this Agreement will be determined by a single arbitrator to be appointed by the parties hereto; (b) any party may refer any such matter to arbitration by written notice to the other and, within 10 days after receipt of such notice, the parties will agree on the appointment of an arbitrator. No person will be appointed as an arbitrator hereunder unless such person agrees in writing to act; (c) if the parties cannot agree on a single arbitrator as provided in subparagraph (b), either party may submit the matter to arbitration (before a single arbitrator) in accordance with the ARBITRATION ACT of the Province of British Columbia (the "Act"); and (d) except as specifically provided in this paragraph, an arbitration hereunder will be conducted in accordance with the Act. The arbitrator will fix a time and place in Vancouver, British Columbia for the purpose of hearing the evidence and representations of the parties and he will preside over the arbitration and determine all questions of procedure not provided for under such Act or this paragraph. After hearing any evidence and representations that the parties may submit, the arbitrator will make an award and reduce the same to writing and deliver one copy thereof to each of the parties. The decision of the arbitrator will be made within 45 days after his appointment, subject to any reasonable delay due to unforeseen circumstances. The expense of the arbitration will be paid as specified in the award. The parties agree that the award of the single arbitrator will be final and binding upon each of them and will not be subject to appeal. 7. The holding of the Royalty will not confer upon the holder thereof any legal or beneficial interest in the Claims. The right to receive a percentage of Net Smelter Returns as and when due is and will be deemed to be a contractual right only. The right to receive a percentage of Net Smelter Returns as and when due will not be deemed to constitute the Holder the partner, agent or legal representative of the Optionee. 8. The Optionee may, if it is the operator of the Claims, but will not be under any duty to, engage in price protection (hedging) or speculative transactions such as futures contracts and commodity options in its sole discretion covering all or part of production from the Claims and, except in the case where Products are actually delivered and a sale is actually consumed under such price protection or speculative transactions, none of the revenues, costs, profits or losses from such transaction will be taken into account in calculating Net Smelter Returns or any interest therein; provided however, that if the Optionee delivers Product under a price protection or speculative program where the -4- proceeds derived therefrom are less than those that would have been received had the Product been sold at the spot price in effect at the time of sale, the Royalty payable to the Holder will be based on such spot price. 9. The Optionee shall have a Right of First Refusal on the proposed sale by the Holder of all or part of the Royalty as follows: (a) if the Holder (in this paragraph called the "Offeror") intends to sell all or part of the Royalty (in this paragraph the "Interest") it will first give notice in writing to the Optionee (in this paragraph called the "Offeree") of such intention together with the terms and conditions on which the Offeror intends to sell the Interest; (b) any communication of an intention to sell pursuant to this paragraph will be in writing delivered in accordance with paragraph 13 hereof and will set out fully and clearly all of the terms and conditions of any intended sale and such communication will be deemed to constitute an offer (the "Offer") by the Offeror to the Offeree to sell the Interest to the Offeree on the terms and conditions set out in such Offer; (c) any Offer made as contemplated in this paragraph will be open for acceptance by the Offeree for a period of 60 days from the date of receipt of the Offer by the Offeree; (d) if the Offeree accepts the Offer within the time provided in subparagraph (c), such acceptance will constitute a binding agreement of purchase and sale between the Offeror and the Offeree for the Interest on the terms and conditions set out in the Offer; and (e) if the Offeree does not accept the Offer within the time prescribed, the Offeror may complete the sale of the Interest on the terms and conditions set out in the Offer or on terms and conditions substantially similar to, but no more favourable than, the terms and conditions set out in the Offer, within 90 days from the expiration of the right of the Offeree to accept such Offer or the Offeror must again comply with the provisions of this paragraph. 10. The operator of the Claims, whether or not it is the Optionee, will be entitled to: (a) make all operational decisions with respect to the methods and extent of mining and processing of ore, concentrate, dore, metal and products produced from the Claims; (b) make all decisions relating to sales of such concentrate, dore, metal and products produced; and (c) make all decisions concerning temporary or long-term cessation of operations. 11. All capitalized terms not otherwise defined herein shall have the meaning given to them in the Option Agreement to which these Terms and Conditions form Schedule "B". EX-10.2 3 ex10-2.txt PROPERTY OPTION AGREEMENT Exhibit 10.2 PROPERTY OPTION AGREEMENT THIS made and entered into as of the ___ day of __________, 2010. BETWEEN: DAVID BEILHARTZ, 49 Airport Road, Whitefish, Ontario, P0M 3E0 ("Beilhartz"); (Beilhartz herein "Optionor") OF THE FIRST PART AND: WIDESCOPE RESOURCES INC., a company having an office at Suite 208-828 Harbourside Drive, North Vancouver, British Columbia, V7P 3R9 (herein "Optionee") OF THE SECOND PART WHEREAS the Optionor have represented that collectively they are the sole beneficial owners in and to those mineral claims in Ontario (the "Claims") as more particularly described in Schedule "A" attached hereto and collectively referred to as the Bell Lake Property; AND WHEREAS the Optionor, subject to the Net Smelter Royalty reserved to the Optionor and the obligations under section 10(g) hereof, now wishes to grant to the Optionee the exclusive right and option to acquire an undivided 100% right, title and interest in and to the Claims on the terms and conditions hereinafter set forth; NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises, the mutual covenants herein set forth and the sum of One Dollar ($1.00) of lawful money of Canada now paid by the Optionee to the Optionor (the receipt whereof is hereby acknowledged), the Parties hereto do hereby mutually covenant and agree as follows: 1. Definitions The following words, phrases and expressions shall have the following meanings: (a) "After Acquired Properties" means any and all mineral interests staked, located, granted or acquired by or on behalf of Widescope hereto during the currency of this Agreement which are located, in whole or in part, within five kilometres of the perimeter of the Claims. Both parties acknowledge that the optionor has entered into -2- discussions to purchase the northwest 1/4 of the north 1/2 of lot 12 conc. 4 lorne twp, to which the optionor herby grants a one year right of first refusal to the optionee, under previously agreed terms, if the optionor finalized the purchase of this parcel. (b) "Expenditures" includes all direct or indirect expenses [net of government incentives and net of payments to the Optionor pursuant to Section 4 hereof] of or incidental to Mining Operations provided that such expenses must relate to work on the Claims as is acceptable to the MNDM for the purposes of keeping the Claims in good standing. The certificate of the Controller or other financial officer of the Optionee, together with a statement of Expenditures in reasonable detail shall be prima facie evidence of such Expenditures; (c) "Facilities" means all mines and plants, including without limitation, all pits, shafts, adits, haulageways, raises and other underground workings, and all buildings, plants, facilities, and other structures, fixtures, and improvements, and all other property, whether fixed or moveable, as the same may exist at any time in, or on the Claims and relating to the operator of the Claims as a mine or outside the Claims if for the exclusive benefit of the Claims only; (d) "Force Majeure" means an event beyond the reasonable control of the Optionee that prevents or delays it from conducting the activities contemplated by this Agreement other than the making of payments referred to in Section 0 herein. Such events shall include but not be limited to acts of God, war, insurrection, action or inaction of governmental agencies, inability to obtain any environmental, operating or other permits or approvals, authorizations or consents and inclement weather conditions; (e) "Mineral Products" means the commercial end products derived from operating the Claims as a mine; (f) "Mineral Rights" means the right to all minerals on, in or under the Claims, excluding quarry right for aggregates ; (g) "Mining Operations" includes: (i) every kind of work done on or with respect to the Claims or the mineral products derived therefrom by or under the direction of the Optionee; and (ii) without limiting the generality of the foregoing, includes the work of assessment, geophysical, geochemical and geological surveys, studies and mapping, investigating, drilling, designing, examining equipping, improving, surveying, shaft sinking, raising, cross-cutting and drifting, searching for, digging, trucking, sampling, working and procuring minerals, ores and metals, in surveying and bringing any mineral claims to lease or patent, in doing all other work usually considered to be prospecting, exploration, development, a feasibility study, -3- mining work, milling, concentration, bonification or ores and concentrates, as well as the separation and extraction of Mineral Products; (h) "MNDM" means the Ontario Ministry of Northern Development and Mines; (i) "Net Smelter Royalty" means that net smelter royalty as defined in Section 0 hereof; (j) "Option" means the option granted by the Optionor to the Optionee to acquire, subject to the Net Smelter Royalty reserved to the Optionor and the obligations under section 10(g) hereof, an undivided 100% right, title and interest in and to the Claims; (k) "Option Period" means the period from the date hereof to the date at which the Optionee has performed its obligations to acquire its 100% interest in the Claims as set out in Section 0 hereof subject to the Net Smelter Royalty reserved to the Optionor and the obligations under section 10(g) hereof; and (l) "Claims" means the mineral claims described in Schedule "A" together with such further claims contiguous to the claims described in Schedule "A" as the parties hereto have mutually agreed to be staked so as to become subject to the Option. 2. Headings Any heading, caption or index hereto shall not be used in any way in construing or interpreting any provision hereof. 3. Singular, Plural Whenever the singular or masculine or neuter is used in this Agreement, the same shall be construed as meaning plural or feminine or body politic or corporate or vice versa, as the context so requires. 4. Option The Optionor hereby grants to the Optionee the sole and exclusive right and option (the "Option") to earn a 100% interest in the Claims, subject to the Net Smelter Royalty reserved to the Optionor and the obligations under section 10(g) hereof, exercisable as follows (it being acknowledged that all cash payments and share issuances provided for herein are to be made to David Beilhartz): (a) the Optionee paying the sum of $25,000 to the Optionor by way of cash and issuing 300,000 common shares of the Optionee to the Optionor forthwith upon execution of this Agreement (the "Execution Date"); (b) on or before that date which is 12 months following the Execution Date the, paying a further $25,000 to the Optionor and issuing to the Optionor a further 300,000 common shares of the Optionee; -4- (c) on or before that date which is 24 months following the Execution Date the paying a further $40,000 to the Optionor and issuing to the Optionor a further 400,000 common shares of the Optionee; (d) on or before that date which is 36 months following the Execution Date the paying a further $40,000 to the Optionor; (e) on or before that date which is 48 months following the Execution Date the paying a further $80,000 to the Optionor; and upon the Optionee having satisfied the obligations set forth above, the Optionee shall be deemed to have exercised the Option (the "Exercise Date") and shall be entitled to an undivided 100% right, title and interest in and to the Claims with the full right and authority to equip the Claims for production and operate the Claims as a mine subject to the rights of the Optionor to the Net Smelter Royalty and subject to the obligations under section 10(g) hereof. Always provided that if any of the obligations set forth above are not satisfied on or before the date stipulated, the Optionee shall without losing any rights under this Agreement have a further thirty (30) days to satisfy any such obligation. 5. Net Smelter Royalty The transfer of the Mineral Rights by the Optionor is subject to the Optionor retaining a 2.5% Net Smelter Royalty with respect to the production from the Claims having the following attributes: (a) the terms and conditions of the Net Smelter Royalty shall be as set forth in schedule B hereto; (b) the Optionee shall have the right to repurchase sixty percent of the Net Smelter Royalty (1.5%) for $1,500,000 at any time prior to the first anniversary date of the commencement of commercial production on the Claims; and (c) the Optionee shall be obligated to pay advances on the Net Smelter Royalty of $5,000 per annum, payable as to $2,500 on August 1 and February 1 of each year commencing August 1, 2013 which amounts, for greater certainty shall serve to reduce any amounts otherwise payable on account of the Net Smelter Royalty. 6. Transfer of Title Upon exercise of this option, the Optionor will deliver or cause to be delivered to the Optionee, a duly executed transfer of the Claims in favour of the Optionee . The Optionee shall be entitled to record the Optionee Transfer with the appropriate government offices to effect transfer of legal title of the Claims into its own name at any time following the Exercise Date provided that in the event the Optionee Transfer is recorded the Optionor shall be entitled to record notice of their interest in the Net Smelter Royalty. All costs for associated with the transfer by both parties will be borne by the optionee. -5- 7. Assignment During the Option Term, no party shall sell, transfer, assign, mortgage, pledge or otherwise encumber its interest in this Agreement or its right or interest in the Claims without the consent of the other parties, such consent to be not unreasonably withheld, provided that any party shall be permitted to assign this Agreement to an "affiliate" or "associate" as those terms are defined in THE BUSINESS CORPORATIONS ACT (British Columbia). It will be a condition of any assignment under this Agreement that such assignee shall agree in writing to be bound by the terms of this Agreement applicable to the assignor. The Optionee shall have the right at any time during the term of this Agreement to relinquish its rights to earn an interest in one or more of the Claims or to reduce the size of one or more of the Claims, in accordance with the laws of Ontario, by providing written notice to the Optionor. Pursuant to any such relinquishment the Claims relinquished shall be returned to the Optionor with sufficient work applied to them such that they are in good standing for a period of twelve (12) months from the date of relinquishment. Following any such relinquishment or reduction in size, the Optionee will have no obligation to incur any further exploration and development expenditures on the portion of the Property relinquished or, in the case of a claims that has been reduced in size, on the portion of such claim that has been dropped. 8. Termination This Agreement shall forthwith terminate in circumstances where: (a) the Optionee fails to make the payments in Sections 0 (including advanced royality payment), of this Agreement on or before the dates set out herein . (b) the Optionee gives 3 months notice of termination to the Optionor which it shall be at liberty to do at any time after the execution of this Agreement and the payment of the amount set forth in clause 0 hereof; (c) this Agreement is terminated in accordance with the provisions of section 19 herein; or (d) the parties mutually agree in writing; and in circumstances where this Agreement terminates prior to the Exercise Date the Optionee shall execute all such documents and do all such things as necessary to transfer legal title to the Claims back to the Optionor. 9. Representations, Warranties and Covenants of the Optionor The Optionor represent, warrant and covenant to and with the Optionee as follows: (a) neither the execution and delivery of this Agreement, nor any of the agreements referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with, -6- result in the breach of or accelerate the performance required by, any agreement to which they are a party; (b) the Claims are accurately described in Schedule "A", are in good standing under the laws of the jurisdiction in which it is located and are free and clear of all liens, charges and encumbrances other than those of which the Optionee has been advised in writing; (c) the Claims have been operated substantially in accordance with all applicable and environmental laws and, to the knowledge of the Optionor there are no environmental conditions existing on the Claims to which any material remedial action is required or any material liability has or may be imposed under applicable environmental law; (d) the Optionor is the sole beneficial owners of the Claims and have the exclusive right to enter into this Agreement and all necessary authority to transfer their interest in the Claims in accordance with the terms of this Agreement; (e) no person, firm or corporation has any proprietary or possessory interest in the Claims other than the Optionor, and no person, firm or corporation is entitled to any royalty or other payment in the nature of rent or royalty on any minerals, ores, metals or concentrates or any other such products removed from the Claims; (f) upon request by the Optionee, and at the sole cost of the Optionee, the Optionor shall deliver or cause to be delivered to the Optionee copies of all available maps and other documents and data in their possession respecting the Claims; and (g) during the currency of this Agreement, the Optionor will: (i) not do any act or thing which would or might in any way adversely affect the rights of the Optionee hereunder; (ii) not relinquish or abandon all or any part of their interest in the Claims; (iii)not mortgage, pledge or encumber the Claims after the Effective Date without the Optionee's prior written consent; and (iv) give the Optionee such access to the Property, at all times at its own risk and expense, as the Optionee shall determine, acting reasonably, is necessary to enable it to carry out the terms of this Agreement. 10. Representations, Warranties and Covenants of the Optionee The Optionee represents, warrants and covenants to and with the Optionor that: (a) the Optionee is a company duly organized validly existing and in good standing under the laws of the Province of British Columbia; -7- (b) the Optionee has full power and authority to carry on its business and to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement; (c) neither the execution and delivery of this Agreement, nor any of the agreements referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with, result in the breach of or accelerate the performance required by, any agreement to which it is a party; (d) the execution and delivery of this Agreement and the agreements contemplated hereby will not violate or result in the breach of the laws of any jurisdiction applicable or pertaining thereto or of its constating documents; (e) this Agreement constitutes a legal, valid and binding obligation of the Optionee; (f) the Optionee shall use its reasonable best efforts to limit the resale restrictions to which the common shares of the Optionee issuable to the Optionor pursuant to Section 0 hereof would be subject to the minimum restrictions provided for under applicable securities laws; (g) both during and after the Option Period, the Optionee will keep the Claims in good standing, free and clear of all liens, charges and encumbrances and in connection therewith shall make all such payments, including, but not limited to taxes and filing fees as shall be necessary and including meeting all of the MNDM minimum yearly assessment work requirements and qualified expenditures thereof in order to keep the Claims in good standing, failing which the Optionee shall take all such steps as shall be necessary to reconvey the Claims to the Optionor; and (h) the Optionee will carry out all Mining Operations on the Claims in a miner-like fashion and will obtain all licenses and permits as shall be necessary to enable it to carry out the terms of this Agreement. 11. Indemnity and Survival of Representations The representations and warranties hereinbefore set out are conditions on which the parties have relied in entering into this Agreement and shall survive the acquisition of any interest in the Claims by the Optionee and each of the parties will indemnify and save the other harmless from all loss, damage, costs, actions and suits arising out of or in connection with any breach of any representation, warranty, covenant, agreement or condition made by them and contained in this Agreement. The Optionee agrees to indemnify and save harmless the Optionor from any liability to which it may be subject arising from any Mining Operations carried out by the Optionee or at is direction on the Claims. -8- 12. Confidentiality The parties hereto agree to hold in confidence all information obtained in confidence in respect of the Claims or otherwise in connection with this Agreement other than in circumstances where a party has an obligation to disclose such information in accordance with applicable securities legislation, in which case such disclosure shall only be made after consultation with the other party. 13. Notice All notices, consents, demands and requests (in this Section 0 called the "Communication") required or permitted to be given under this Agreement shall be in writing and may be delivered personally sent by telegram, by telex or telecopier or other electronic means or may be forwarded by first class prepaid registered mail to the parties at their addresses first above written. Any Communication delivered personally or sent by telegram, telex or telecopier or other electronic means shall be deemed to have been given and received on the second business day next following the date of sending. Any Communication mailed as aforesaid shall be deemed to have been given and received on the fifth business day following the date it is posted, addressed to the parties at their addresses first above written or to such other address or addresses as either party may from time to time specify by notice to the other; provided, however, that if there shall be a mail strike, slowdown or other labour dispute which might affect delivery of the Communication by mail, then the Communication shall be effective only if actually delivered. 14. Further Assurances Each of the parties to this Agreement shall from time to time and at all times do all such further acts and execute and deliver all further deeds and documents as shall be reasonably required in order fully to perform and carry out the terms of this Agreement. 15. Entire Agreement The parties hereto acknowledge that they have expressed herein the entire understanding and obligation of this Agreement and it is expressly understood and agreed that no implied covenant, condition, term or reservation, shall be read into this Agreement relating to or concerning any matter or operation provided for herein. 16. Proper Law and Arbitration This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein. The parties hereto hereby irrevocably attorn to the jurisdiction of the Courts of British Columbia. All disputes arising out of or in connection with this Agreement, or in respect of any defined legal relationship associated therewith or derived therefrom, shall be referred to and finally resolved by a sole arbitrator by arbitration under the rules of THE ARBITRATION ACT of British Columbia. -9- 17. Enurement This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. 18. After Acquired Properties The parties covenant and agree, each with the other, that any and all After Acquired Properties shall be subject to the terms and conditions of this Agreement and shall, subject to the provisions hereof, be added to and deemed, for the purposes hereof, to be included in the Claims. In this regard any costs incurred by the Optionee in staking, locating, recording or otherwise acquiring any "After Acquired Properties" will be borne by the Optionee. In circumstances where the Optionor stake, locate, record or otherwise acquire any "After Acquired Properties" they shall so notify the Optionee and, provided that the Optionee reimburses the Optionor for all actual costs related thereto, as set forth by the Optionor in writing, such After Acquired Properties shall be added to and deemed, for the purposes hereof, to be included in the Claims. 19. Default Notwithstanding anything in this Agreement to the contrary if any party (a "Defaulting Party") is in default of any requirement herein set forth the party affected by such default shall give written notice to the Defaulting Party specifying the default and the Defaulting Party shall not lose any rights under this Agreement, unless thirty (30) days after the giving of notice of default by the affected party the Defaulting Party has failed to cure the default by the appropriate performance and if the Defaulting Party fails within such period to cure any such default, the affected party shall be entitled to seek any remedy it may have on account of such default including, without limiting, termination of this Agreement. 20. Technical Data In circumstances where this Agreement is terminated prior to the Exercise Date, the Optionee shall deliver over to the Optionor all technical data and other documents and information then in its possession respecting the Claims and the Mineral Rights. 21. Payment All references to monies hereunder shall be in Canadian funds. 22. Option Only This is an option only and except as herein specifically provided otherwise, nothing herein contained shall be construed as obligating the Optionee to do any acts or make any payments hereunder, and any act or acts or payment or payments as shall be made hereunder shall not be construed as obligating the Optionee to do any further act or make any further payment or payments. -10- 23. Supersedes Previous Agreements This Agreement supersedes and replaces all previous oral or written agreements, memoranda, correspondence or other communications between the parties hereto relating to the subject matter hereof. -11- IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement effective as of the ____ day of _______________, 2010. WIDESCOPE RESOURCES INC. Per: --------------------------------------- Authorized Signatory - ------------------------------------------- DAVID BEILHARTZ SCHEDULE "A" CLAIMS LIST FOR BELL LAKE PROPERTY Mining rights only Lot 11 con 5 Lorne Twp. Pin 73395-0010 PCL 2217 SEC SWS MRO; LT 11 CON 5 LORNE EXCEPT THE ROW OF THE ALGOMA BRANCH OF THE CANADIAN PACIFIC RAILWAY; GREATER SUDBURY Not including quarry right for aggregate. Not including surface rights SCHEDULE "B" TO THAT OPTION AGREEMENT BETWEEN DAVID BEILHARTZ AND WIDESCOPE RESOURCES INC. DATED ____________ ____, 2010 (THE "OPTION AGREEMENT") NET SMELTER ROYALTY TERMS AND CONDITIONS 1. The Net Smelter Royalty shall be equal to 2.5% Net Smelter Returns (as hereinafter defined) (subject to adjustment in accordance with section 5 of the Option Agreement) from any mine in production or put into production as a result of commencing commercial production on The Claims. 2. "Net Smelter Returns" means: (a) the actual proceeds received by the Optionee from any mint, smelter, refinery or other purchaser from the sale of ores, minerals, mineral substances, metals (including bullion) or concentrates (collectively "Product") produced from the Claims and sold or proceeds received from an insurer in respect of Product, after deducting from such proceeds the following charges to the extent that they were not deducted by the purchaser in computing payments: (i) smelting and refining charges; (ii) penalties, smelter assay costs and umpire assay costs; (iii)cost of freight and handling of ores, metals or concentrates from the Claims to any mint, smelter, refinery, or other purchaser; (iv) marketing costs; (v) costs of insurance in respect of Product; (vi) customs duties, severance tax, royalties, ad valorem or mineral taxes or the like and export and import taxes or tariffs payable in respect of the Product; and (b) if the Optionee is not the operator but holds a net smelter return royalty, the same as the net smelter return royalty held by the Optionee. 3. The Net Smelter Royalty will be: (a) calculated and paid on a quarterly basis within 45 days after the end of each quarter of the fiscal year for the mine (an "Operating Year"), based on the Net Smelter Returns for such quarter; -2- (b) each payment of Net Smelter Royalty will be accompanied by an unaudited statement indicating the calculation of the Royalty hereunder in reasonable detail and the Holder will receive, within three months of the end of each Operating Year, an annual summary unaudited statement (an "Annual Statement") showing in reasonable detail the calculation of the Royalty for the last completed Operating Year and showing all credits and deductions added to or deducted from the amount due to the Holder; (c) the holder (the "Holder") of the Net Smelter Royalty will have 45 days from the time of receipt of the Annual Statement to question the accuracy thereof in writing and, failing such objection, the Annual Statement will be deemed to be correct and unimpeachable thereafter; (d) if the Annual Statement is questioned by the Holder, and if such questions cannot be resolved between the Optionee and the Holder, the Holder will have 12 months from the time of receipt of the Annual Statement to have such audited, which will initially be at the expense of the Holder; (e) the audited Annual Statement will be final and determinative of the calculation of the Royalty for the audited period and will be binding on the parties and any overpayment of Royalty will be deducted by the Optionee from the next payment of Royalty and any underpayment of Royalty will be paid forthwith by the Optionee; (f) the costs of the audit will be borne by the Holder if the Annual Statement was accurate within 1% or overstated the Royalty payable by greater than 1% and will be borne by the Optionee if such statement understated the Royalty payable by greater than 1%. If the Optionee is obligated to pay for the audit it will forthwith reimburse the Holder for any of the audit costs which it had paid; (g) the Holder will be entitled to examine, on reasonable notice and during normal business hours, such books and records as are reasonably necessary to verify the payment of the Royalty to it from time to time, provided however that such examination shall not unreasonably interfere with or hinder the Optionee's operations or procedures; and (h) if the Optionee's interest in the Claims is a Net Smelter Return royalty, the Optionee's accounting and reporting obligations to the Holder under this paragraph 3 will be limited to the delivery of such documentation as the Optionee receives from the operator of the Claims in respect of the payment by such operator of Net Smelter Returns to the Optionee. 4. Notwithstanding the provisions of section 3 hereof, the Optionee shall pay advances on account of the Net Smelter Royalty in the amount of $5,000 per annum, payable semi-annually on August 1 and February 1 of each year, commencing as of August 1, 2013, which amounts when paid shall serve to reduce any amounts otherwise payable under section 3 hereof. 5. The determination of the Royalty hereunder is based on the premise that production will be developed solely from the Claims. If the Claims and one or more other properties are incorporated in a single mining project and metals, ores or concentrates pertaining to each are not readily segregated on a practical or equitable basis, the allocation of actual proceeds received and -3- deductions therefrom will be negotiated between the parties and, if the parties fail to agree on such allocation, such will be referred to arbitration pursuant to paragraph 5 of this Agreement. In such arbitration the arbitrator will make reference to this Agreement and to practices used in mining operations that are of a similar nature. The arbitrator will be entitled to retain such independent mining consultants as he considers necessary. The decision of the arbitrator will be final and binding on the parties. 6. Any matters in this Agreement which are to be settled by arbitration will be subject to the following: (a) any matter required or permitted to be referred to arbitration pursuant to this Agreement will be determined by a single arbitrator to be appointed by the parties hereto; (b) any party may refer any such matter to arbitration by written notice to the other and, within 10 days after receipt of such notice, the parties will agree on the appointment of an arbitrator. No person will be appointed as an arbitrator hereunder unless such person agrees in writing to act; (c) if the parties cannot agree on a single arbitrator as provided in subparagraph (b), either party may submit the matter to arbitration (before a single arbitrator) in accordance with the ARBITRATION ACT of the Province of British Columbia (the "Act"); and (d) except as specifically provided in this paragraph, an arbitration hereunder will be conducted in accordance with the Act. The arbitrator will fix a time and place in Vancouver, British Columbia for the purpose of hearing the evidence and representations of the parties and he will preside over the arbitration and determine all questions of procedure not provided for under such Act or this paragraph. After hearing any evidence and representations that the parties may submit, the arbitrator will make an award and reduce the same to writing and deliver one copy thereof to each of the parties. The decision of the arbitrator will be made within 45 days after his appointment, subject to any reasonable delay due to unforeseen circumstances. The expense of the arbitration will be paid as specified in the award. The parties agree that the award of the single arbitrator will be final and binding upon each of them and will not be subject to appeal. 7. The holding of the Royalty will not confer upon the holder thereof any legal or beneficial interest in the Claims. The right to receive a percentage of Net Smelter Returns as and when due is and will be deemed to be a contractual right only. The right to receive a percentage of Net Smelter Returns as and when due will not be deemed to constitute the Holder the partner, agent or legal representative of the Optionee. 8. The Optionee may, if it is the operator of the Claims, but will not be under any duty to, engage in price protection (hedging) or speculative transactions such as futures contracts and commodity options in its sole discretion covering all or part of production from the Claims and, except in the case where Products are actually delivered and a sale is actually consumed under such price protection or speculative transactions, none of the revenues, costs, profits or losses from such transaction will be taken into account in calculating Net Smelter Returns or any interest therein; provided however, that if the Optionee delivers Product under a price protection or speculative program where the -4- proceeds derived therefrom are less than those that would have been received had the Product been sold at the spot price in effect at the time of sale, the Royalty payable to the Holder will be based on such spot price. 9. The Optionee shall have a Right of First Refusal on the proposed sale by the Holder of all or part of the Royalty as follows: (a) if the Holder (in this paragraph called the "Offeror") intends to sell all or part of the Royalty (in this paragraph the "Interest") it will first give notice in writing to the Optionee (in this paragraph called the "Offeree") of such intention together with the terms and conditions on which the Offeror intends to sell the Interest; (b) any communication of an intention to sell pursuant to this paragraph will be in writing delivered in accordance with paragraph 13 hereof and will set out fully and clearly all of the terms and conditions of any intended sale and such communication will be deemed to constitute an offer (the "Offer") by the Offeror to the Offeree to sell the Interest to the Offeree on the terms and conditions set out in such Offer; (c) any Offer made as contemplated in this paragraph will be open for acceptance by the Offeree for a period of 60 days from the date of receipt of the Offer by the Offeree; (d) if the Offeree accepts the Offer within the time provided in subparagraph (c), such acceptance will constitute a binding agreement of purchase and sale between the Offeror and the Offeree for the Interest on the terms and conditions set out in the Offer; and (e) if the Offeree does not accept the Offer within the time prescribed, the Offeror may complete the sale of the Interest on the terms and conditions set out in the Offer or on terms and conditions substantially similar to, but no more favourable than, the terms and conditions set out in the Offer, within 90 days from the expiration of the right of the Offeree to accept such Offer or the Offeror must again comply with the provisions of this paragraph. 10. The operator of the Claims, whether or not it is the Optionee, will be entitled to: (a) make all operational decisions with respect to the methods and extent of mining and processing of ore, concentrate, dore, metal and products produced from the Claims; (b) make all decisions relating to sales of such concentrate, dore, metal and products produced; and (c) make all decisions concerning temporary or long-term cessation of operations. 11. All capitalized terms not otherwise defined herein shall have the meaning given to them in the Option Agreement to which these Terms and Conditions form Schedule "B". EX-10.3 4 ex10-3.txt PROPERTY OPTION AGREEMENT Exhibit 10.3 PROPERTY OPTION AGREEMENT THIS made and entered into as of the ___ day of __________, 2010. BETWEEN: JOHN AND MARIE BRADY, 1227 Holland Road, Sudbury, Ontario, P3A 3R1; (herein "Optionors") OF THE FIRST PART AND: WIDESCOPE RESOURCES INC., a company having an office at Suite 208-828 Harbourside Drive, North Vancouver, British Columbia, V7P 3R9 (herein "Optionee") OF THE SECOND PART WHEREAS the Optionors have represented that they are the sole beneficial owners in and to those mineral claims in Ontario (the "Claims") as more particularly described in Schedule "A" attached hereto and collectively referred to as the Halcyon Property; AND WHEREAS the Optionors, subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof, now wishes to grant to the Optionee the exclusive right and option to acquire an undivided 100% right, title and interest in and to the Claims on the terms and conditions hereinafter set forth; NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises, the mutual covenants herein set forth and the sum of One Dollar ($1.00) of lawful money of Canada now paid by the Optionee to the Optionors (the receipt whereof is hereby acknowledged), the Parties hereto do hereby mutually covenant and agree as follows: 1. Definitions The following words, phrases and expressions shall have the following meanings: (a) "After Acquired Properties" means any and all mineral interests staked, located, granted or acquired by or on behalf of either of the parties hereto during the currency of this Agreement which are located, in whole or in part, within five kilometres of the perimeter of the Claims; -2- (b) "Expenditures" includes all direct or indirect expenses [net of government incentives and net of payments to the Optionors pursuant to Section 4 hereof] of or incidental to Mining Operations provided that such expenses must relate to work on the Claims as is acceptable to the MNDM for the purposes of keeping the Claims in good standing. The certificate of the Controller or other financial officer of the Optionee, together with a statement of Expenditures in reasonable detail shall be prima facie evidence of such Expenditures; (c) "Facilities" means all mines and plants, including without limitation, all pits, shafts, adits, haulageways, raises and other underground workings, and all buildings, plants, facilities, and other structures, fixtures, and improvements, and all other property, whether fixed or moveable, as the same may exist at any time in, or on the Claims and relating to the operator of the Claims as a mine or outside the Claims if for the exclusive benefit of the Claims only; (d) "Force Majeure" means an event beyond the reasonable control of the Optionee that prevents or delays it from conducting the activities contemplated by this Agreement other than the making of payments referred to in Section 0 herein. Such events shall include but not be limited to acts of God, war, insurrection, action or inaction of governmental agencies, inability to obtain any environmental, operating or other permits or approvals, authorizations or consents and inclement weather conditions; (e) "Mineral Products" means the commercial end products derived from operating the Claims as a mine; (f) "Mineral Rights" means the right to all minerals on, in or under the Claims; (g) "Mining Operations" includes: (i) every kind of work done on or with respect to the Claims or the mineral products derived therefrom by or under the direction of the Optionee; and (ii) without limiting the generality of the foregoing, includes the work of assessment, geophysical, geochemical and geological surveys, studies and mapping, investigating, drilling, designing, examining equipping, improving, surveying, shaft sinking, raising, cross-cutting and drifting, searching for, digging, trucking, sampling, working and procuring minerals, ores and metals, in surveying and bringing any mineral claims to lease or patent, in doing all other work usually considered to be prospecting, exploration, development, a feasibility study, mining work, milling, concentration, bonification or ores and concentrates, as well as the separation and extraction of Mineral Products; (h) "MNDM" means the Ontario Ministry of Northern Development and Mines; (i) "Net Smelter Royalty" means that net smelter royalty as defined in Section 0 hereof; -3- (j) "Option" means the option granted by the Optionors to the Optionee to acquire, subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof, an undivided 100% right, title and interest in and to the Claims; (k) "Option Period" means the period from the date hereof to the date at which the Optionee has performed its obligations to acquire its 100% interest in the Claims as set out in Section 0 hereof subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof; and (l) "Claims" means the mineral claims described in Schedule "A" together with such further claims contiguous to the claims described in Schedule "A" as the parties hereto have mutually agreed to be staked so as to become subject to the Option. 2. Headings Any heading, caption or index hereto shall not be used in any way in construing or interpreting any provision hereof. 3. Singular, Plural Whenever the singular or masculine or neuter is used in this Agreement, the same shall be construed as meaning plural or feminine or body politic or corporate or vice versa, as the context so requires. 4. Option The Optionors hereby grant to the Optionee the sole and exclusive right and option (the "Option") to earn a 100% interest in the Claims, subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof, exercisable as follows: (a) the Optionee paying the sum of $15,000 to the Optionors by way of cash and issuing 300,000 common shares of the Optionee to the Optionors forthwith upon execution of this Agreement (the "Execution Date"); (b) on or before that date which is 12 months following the Execution Date the Optionee incurring $22,000 of Expenditures, paying a further $25,000 to the Optionors and issuing to the Optionors a further 200,000 common shares of the Optionee; (c) on or before that date which is 24 months following the Execution Date the Optionee, incurring a further $22,000 of Expenditures, paying a further $35,000 to the Optionors and issuing to the Optionors a further 200,000 common shares of the Optionee; (d) on or before that date which is 36 months following the Execution Date the Optionee incurring a further $22,000 of Expenditures and paying a further $35,000 to the Optionors; and -4- upon the Optionee having satisfied the obligations set forth above, the Optionee shall be deemed to have exercised the Option (the "Exercise Date") and shall be entitled to an undivided 100% right, title and interest in and to the Claims with the full right and authority to equip the Claims for production and operate the Claims as a mine subject to the rights of the Optionors to the Net Smelter Royalty and subject to the obligations under section 10(g) hereof. Always provided that if any of the obligations set forth above are not satisfied on or before the date stipulated, the Optionee shall without losing any rights under this Agreement have a further thirty (30) days to satisfy any such obligation. In connection with the incurring of the Expenditures and as a condition thereof, the Optionee agrees to file with the MNDM all eligible work performed on the Claims within 90 days of the completion of each phase of work. 5. Net Smelter Royalty The transfer of the Mineral Rights by the Optionors is subject to the Optionors retaining a 2.5% Net Smelter Royalty with respect to the production from the Claims having the following attributes: (a) the terms and conditions of the Net Smelter Royalty shall be as set forth in schedule B hereto; (b) the Optionee shall have the right to repurchase sixty percent of the Net Smelter Royalty (1.5%) for $1,500,000 at any time prior to the first anniversary date of the commencement of commercial production on the Claims; and (c) the Optionee shall be obligated to pay advances on the Net Smelter Royalty of $8,000 per annum, payable as to $4,000 on August 1 and February 1 of each year commencing August 1, 2013 which amounts, for greater certainty shall serve to reduce any amounts otherwise payable on account of the Net Smelter Royalty. 6. Transfer of Title Upon execution of this Agreement, the Optionors will deliver or cause to be delivered to the Optionee, a duly executed transfer of the Claims in favour of the Optionee (the "Optionee Transfer") to be held in trust by said solicitors subject to the terms and conditions of this Agreement. The Optionee shall be entitled to record the Optionee Transfer with the appropriate government offices to effect transfer of legal title of the Claims into its own name at any time following the Exercise Date provided that in the event the Optionee Transfer is recorded the Optionors shall be entitled to record notice of their interest in the Net Smelter Royalty. 7. Assignment During the Option Term, no party shall sell, transfer, assign, mortgage, pledge or otherwise encumber its interest in this Agreement or its right or interest in the Claims without the consent of the other parties, such consent to be not unreasonably withheld, provided that any party shall be permitted to assign this Agreement to an "affiliate" or "associate" as those terms are defined in THE -5- BUSINESS CORPORATIONS ACT (British Columbia). It will be a condition of any assignment under this Agreement that such assignee shall agree in writing to be bound by the terms of this Agreement applicable to the assignor. The Optionee shall have the right at any time during the term of this Agreement to relinquish its rights to earn an interest in one or more of the Claims or to reduce the size of one or more of the Claims, in accordance with the laws of Ontario, by providing written notice to the Optionors. Pursuant to any such relinquishment the Claims relinquished shall be returned to the Optionor with sufficient work applied to them such that they are in good standing for a period of twelve (12) months from the date of relinquishment. Following any such relinquishment or reduction in size, the Optionee will have no obligation to incur any further exploration and development expenditures on the portion of the Property relinquished or, in the case of a claims that has been reduced in size, on the portion of such claim that has been dropped. 8. Termination This Agreement shall forthwith terminate in circumstances where: (a) the Optionee fails to make the payments for or carry out the Expenditures required in Sections 0 of this Agreement on or before the dates set out herein provided that, in circumstances where the Optionee is prevented from carrying out any of the Expenditures contemplated in Sections 0 prior to the dates set out therein due to Force Majeure, then the Optionee shall forthwith give the Optionors written notice of the commencement and termination of the said Force Majeure and thereafter such dates shall be deemed to have been extended by the period of time during which the Force Majeure remains in effect; (b) the Optionee gives 3 months notice of termination to the Optionors which it shall be at liberty to do at any time after the execution of this Agreement and the payment of the amount set forth in clause 0 hereof; (c) this Agreement is terminated in accordance with the provisions of section 0 herein; or (d) the parties mutually agree in writing; and in circumstances where this Agreement terminates prior to the Exercise Date the Optionee shall execute all such documents and do all such things as necessary to transfer legal title to the Claims back to the Optionors. 9. Representations, Warranties and Covenants of the Optionors The Optionors jointly represent, warrant and covenant to and with the Optionee as follows: (a) neither the execution and delivery of this Agreement, nor any of the agreements referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with, -6- result in the breach of or accelerate the performance required by, any agreement to which they are a party; (b) the Claims are accurately described in Schedule "A", are in good standing under the laws of the jurisdiction in which it is located and are free and clear of all liens, charges and encumbrances other than those of which the Optionee has been advised in writing; (c) the Claims have been operated substantially in accordance with all applicable and environmental laws and, to the knowledge of the Optionors there are no environmental conditions existing on the Claims to which any material remedial action is required or any material liability has or may be imposed under applicable environmental law; (d) the Optionors are the sole beneficial owners of the Claims and have the exclusive right to enter into this Agreement and all necessary authority to transfer their interest in the Claims in accordance with the terms of this Agreement; (e) no person, firm or corporation has any proprietary or possessory interest in the Claims other than the Optionors, and no person, firm or corporation is entitled to any royalty or other payment in the nature of rent or royalty on any minerals, ores, metals or concentrates or any other such products removed from the Claims; (f) upon request by the Optionee, and at the sole cost of the Optionee, the Optionors shall deliver or cause to be delivered to the Optionee copies of all available maps and other documents and data in their possession respecting the Claims; and (g) during the currency of this Agreement, the Optionors will: (i) not do any act or thing which would or might in any way adversely affect the rights of the Optionee hereunder; (ii) not relinquish or abandon all or any part of their interest in the Claims; (iii)not mortgage, pledge or encumber the Claims after the Effective Date without the Optionee's prior written consent; and (iv) give the Optionee such access to the Property, at all times at its own risk and expense, as the Optionee shall determine, acting reasonably, is necessary to enable it to carry out the terms of this Agreement. 10. Representations, Warranties and Covenants of the Optionee The Optionee represents, warrants and covenants to and with the Optionors that: (a) the Optionee is a company duly organized validly existing and in good standing under the laws of the Province of British Columbia; -7- (b) the Optionee has full power and authority to carry on its business and to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement; (c) neither the execution and delivery of this Agreement, nor any of the agreements referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with, result in the breach of or accelerate the performance required by, any agreement to which it is a party; (d) the execution and delivery of this Agreement and the agreements contemplated hereby will not violate or result in the breach of the laws of any jurisdiction applicable or pertaining thereto or of its constating documents; (e) this Agreement constitutes a legal, valid and binding obligation of the Optionee; (f) the Optionee shall use its reasonable best efforts to limit the resale restrictions to which the common shares of the Optionee issuable to the Optionors pursuant to Section 0 hereof would be subject to the minimum restrictions provided for under applicable securities laws; (g) both during and after the Option Period, the Optionee will keep the Claims in good standing, free and clear of all liens, charges and encumbrances and in connection therewith shall make all such payments, including, but not limited to taxes and filing fees as shall be necessary and including meeting all of the MNDM minimum yearly assessment work requirements and qualified expenditures thereof in order to keep the Claims in good standing, failing which the Optionee shall take all such steps as shall be necessary to reconvey the Claims to the Optionors; and (h) the Optionee will carry out all Mining Operations on the Claims in a miner-like fashion and will obtain all licenses and permits as shall be necessary to enable it to carry out the terms of this Agreement. 11. Indemnity and Survival of Representations The representations and warranties hereinbefore set out are conditions on which the parties have relied in entering into this Agreement and shall survive the acquisition of any interest in the Claims by the Optionee and each of the parties will indemnify and save the other harmless from all loss, damage, costs, actions and suits arising out of or in connection with any breach of any representation, warranty, covenant, agreement or condition made by them and contained in this Agreement. The Optionee agrees to indemnify and save harmless the Optionors from any liability to which it may be subject arising from any Mining Operations carried out by the Optionee or at is direction on the Claims. -8- 12. Confidentiality The parties hereto agree to hold in confidence all information obtained in confidence in respect of the Claims or otherwise in connection with this Agreement other than in circumstances where a party has an obligation to disclose such information in accordance with applicable securities legislation, in which case such disclosure shall only be made after consultation with the other party. 13. Notice All notices, consents, demands and requests (in this Section 0 called the "Communication") required or permitted to be given under this Agreement shall be in writing and may be delivered personally sent by telegram, by telex or telecopier or other electronic means or may be forwarded by first class prepaid registered mail to the parties at their addresses first above written. Any Communication delivered personally or sent by telegram, telex or telecopier or other electronic means shall be deemed to have been given and received on the second business day next following the date of sending. Any Communication mailed as aforesaid shall be deemed to have been given and received on the fifth business day following the date it is posted, addressed to the parties at their addresses first above written or to such other address or addresses as either party may from time to time specify by notice to the other; provided, however, that if there shall be a mail strike, slowdown or other labour dispute which might affect delivery of the Communication by mail, then the Communication shall be effective only if actually delivered. 14. Further Assurances Each of the parties to this Agreement shall from time to time and at all times do all such further acts and execute and deliver all further deeds and documents as shall be reasonably required in order fully to perform and carry out the terms of this Agreement. 15. Entire Agreement The parties hereto acknowledge that they have expressed herein the entire understanding and obligation of this Agreement and it is expressly understood and agreed that no implied covenant, condition, term or reservation, shall be read into this Agreement relating to or concerning any matter or operation provided for herein. 16. Proper Law and Arbitration This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein. The parties hereto hereby irrevocably attorn to the jurisdiction of the Courts of British Columbia. All disputes arising out of or in connection with this Agreement, or in respect of any defined legal relationship associated therewith or derived therefrom, shall be referred to and finally resolved by a sole arbitrator by arbitration under the rules of THE ARBITRATION ACT of British Columbia. -9- 17. Enurement This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. 18. After Acquired Properties The parties covenant and agree, each with the other, that any and all After Acquired Properties shall be subject to the terms and conditions of this Agreement and shall, subject to the provisions hereof, be added to and deemed, for the purposes hereof, to be included in the Claims. In this regard any costs incurred by the Optionee in staking, locating, recording or otherwise acquiring any "After Acquired Properties" will be borne by the Optionee. In circumstances where the Optionors stake, locate, record or otherwise acquire any "After Acquired Properties" they shall so notify the Optionee and, provided that the Optionee reimburses the Optionors for all actual costs related thereto, as set forth by the Optionors in writing, such After Acquired Properties shall be added to and deemed, for the purposes hereof, to be included in the Claims. 19. Excess Work Credits It is acknowledged that there may be excess work credits (the "Excess Credits") on file with MNDM in relation to the Claims as at the date hereof and in such case it is acknowledged and agreed that the Optionors retain title to such Excess Credits and may remove or use them as they in their sole discretion may decide; provided that in removing or using such Excess Credits the Optionors shall always ensure that sufficient Excess Credits remain in place to ensure that the Claims remain in good standing for a period of 12 months from the date of such removal or use. 20. Default Notwithstanding anything in this Agreement to the contrary if any party (a "Defaulting Party") is in default of any requirement herein set forth the party affected by such default shall give written notice to the Defaulting Party specifying the default and the Defaulting Party shall not lose any rights under this Agreement, unless thirty (30) days after the giving of notice of default by the affected party the Defaulting Party has failed to take reasonable steps to cure the default by the appropriate performance and if the Defaulting Party fails within such period to take reasonable steps to cure any such default, the affected party shall be entitled to seek any remedy it may have on account of such default including, without limiting, termination of this Agreement. 21. Technical Data In circumstances where this Agreement is terminated prior to the Exercise Date, the Optionee shall deliver over to the Optionors all technical data and other documents and information then in its possession respecting the Claims and the Mineral Rights. -10- 22. Payment All references to monies hereunder shall be in Canadian funds. 23. Option Only This is an option only and except as herein specifically provided otherwise, nothing herein contained shall be construed as obligating the Optionee to do any acts or make any payments hereunder, and any act or acts or payment or payments as shall be made hereunder shall not be construed as obligating the Optionee to do any further act or make any further payment or payments. 24. Supersedes Previous Agreements This Agreement supersedes and replaces all previous oral or written agreements, memoranda, correspondence or other communications between the parties hereto relating to the subject matter hereof. -11- IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement effective as of the ____ day of _______________, 2010. WIDESCOPE RESOURCES INC. Per: ---------------------------------------- Authorized Signatory - -------------------------------------------- JOHN BRADY - -------------------------------------------- MARIE BRADY SCHEDULE "A" CLAIMS LIST FOR HALCYON PROPERTY Location/Township: The property is located 35 Km NNE of Sudbury in the SE corner of Parkin Twp. at latitude 46o 48' N and Longitude 80o 50' W. The property is readily accessible by driving 30 Km north of Sudbury VIA highway 69 N and Hwy 545 to the Whistle Mine road. Then NE for 10 Km, to within 300m of the property by bushroad. Commodities: Ni, Cu, PGM's,Co; + AU,CU,ZN Property Description: 46 unpatented mining claim units. Proposal: Terms and work program are open. Ownership: John & Marie Brady, 1227 Holland Rd., Sudbury, Ontario P3A 3R1. Tel: (705) 525-4129. Property Geology and Minerlization: The property lies +/- 2 KM north and `on strike' of FNX's, COPPER/PGE rich Podolsky Mine, and is adjacent to Brady's Post Creek property. The property is underlain by a suite of Huronian sediments in uncomfortable contact with an Archean volcanic assemblage that includes mafic volcanics with pronounced felsic "lenses", rhyolites and iron formation. A number of quartz diabase dykes intrude along the contact zones.Although only minimal exploration has occured, results have been positive in the identification of geophysical targets. (Em/ MAG) and distinct geochemical anomalies of Au, Cu, Zn, As; as well as Ni, Cu, Co, Au. Work History: and Results 1930 - C. Mcguire - Stripping, trenching - 0.27 oz. Au in mineralized quartzite. ( ref. F.N.M. ) 1953 - New Alger Mines - Nickel exploration, 4 diamond drillholes from 150-200 ft. on property west boundary. Intersected phyrotite chalcopyrite and arsenopyrite. None of the core was assayed. 1987/1988 - Imperial Metals Corp. Airborne Geophysical - identified several EM conductors interpreted as possible sulfide bearing: also mag. anomalies. - Geochemical survey - identified a number of multi-element anomalies in Au, Cu, Zn, As -2- and Ni, Cu, Co, Au. Further work recommended -but no follow up. Work Hist. Cont.... 1992 J. Brady - Stripping, Trenching. Exposed a sulfide rich felsic-volcanic breccia zone. Minerals identified were chalcopyrite and phyrotite over a 2 m exposed width. This zone is adjacent to a 1 m wide graphite zone that carries 0.056 oz./ton Au. No follow up performed. The property is 2 Km North West and on strike with the Whistle Mine Offset. (Recent drilling 185 ft. Ni, Cu, Co, Pt., Au, incl. 33 ft. 12.1% Cu, 0.2 % Ni, 0.255 oz./ton precious metals) (1). The former producing Jon Smith Mine is situated 1 Km North of the property (Ni, Cu, Co, Pt) The sedimentary volcanic contact underlying the property is identical to the geology of the Meridian Res. Property which is situated 900m to the North West [0.33 oz. Au x 11 ft.; 0.44 oz. Au x7.5 ft.]. While recent work on the property has outlined several significant exploration targets, none of the recommended follow up work has been performed. References: - personal Files - Resident Geologist Files Sudbury - (1) Northern Miner Aug. 15/ 1994 - NOTE - In late 1996, an excavator was utlilized to follow-up on the elevated gold-arsenic results from the Imperial Metals Corp. (1987/1988) geo-chemical survey. Significant gold results were obtained near the volcanic-sedimentary contact and adjacent to a long, sinuous and brecciated iron formation, assays yielded Au +5g/t. Also, trenching along a diabase contact on the Parkin-Aylmer Twp. line yielded > 16 g/t Au. 2003/2004 - Champion Bear Res. Drilled a geophysical target hosted in a Mafic Volcanic sequence and encountered modest values in Nickel [.38%] and anomalous Copper/Cobalt. GEOCHEMISTRY: An MMI Geochem soil survey by Dr. Mark Fedikow identified a number of highly anomalous areas of Ni/Cu/ PGE's and Gold/Copper, which were not followed up. In addition a 2004 Lake/Pond Sediment Geochemical Survey conducted by the OGS [File 6126] shows a number of sites on the Halcyon Property that yielded significant AG; AU; CU; PT; PD values to the 99th percentile. This highly anomalous, Halcyon area is referred to as `ANOMALOUS AREA 6 in the OGS Survey. These 2 geochemical surveys demonstrate a distinct trend of enriched CU; PT; PD; AU; AG from FNX's Podolsky Mine northward through the Post Creek and Halcyon Properties. SUMMARY THE PROPERTY IS ON STRIKE AND WITHIN 2 KM OF THE WHISTLE OFFSET DYKE/PODOLSKY MINE -3- -A NUMBER OF UNTESTED MAG/EM/IP ANOMALIES -A NUMBER OF GEOCHEMICAL MULTI-ELEMENT ANOMALIES,INCLUDING THOSE GENERALLY ASSOCIATED WITH NI/CU/PGE AND AU/CU/ZN MINERALIZATION. - SIGNIFICANT BEDROCK GOLD ASSAYS OBTAINED NEAR OLD `B' HORIZON SOIL ANOMALIES. JOHN BRADY-UPDATED JAN/2010 HALCYON CLAIM LIST [JAN.31/2010] SUDBURY MINING DIVISION - 116945 - CHAMPION BEAR RESOURCES LTD.
Township/ Claim Recording Claim Due Percent Work Total Total Claim Area Number Date Date Status Option Required Applied Reserve Bank - ---- ------ ---- ---- ------ ------ -------- ------- ------- ---- AYLMER 1043484 1989-Jan-16 2012-Jan-16 A 100% $ 400 $ 8,800 $ 0 $ 0 AYLMER 1043485 1989-Jan-16 2012-Jan-16 A 100% $ 400 $ 8,800 $ 0 $ 0 AYLMER 1043486 1989-Jan-16 2012-Jan-16 A 100% $ 400 $ 8,800 $ 0 $ 0 AYLMER 1043487 1989-Jan-16 2012-Jan-16 A 100% $ 400 $ 8,800 $ 0 $ 0 AYLMER 1043488 1989-Jan-16 2012-Jan-16 A 100% $ 400 $ 8,800 $ 0 $ 0 AYLMER 1043489 1989-Jan-16 2012-Jan-16 A 100% $ 400 $ 8,800 $ 0 $ 0 AYLMER 1043490 1989-Jan-16 2012-Jan-16 A 100% $ 400 $ 8,800 $ 0 $ 0 AYLMER 1043491 1989-Jan-16 2012-Jan-16 A 100% $ 400 $ 8,800 $ 0 $ 0 AYLMER 4212206 2006-Jun-21 2010-Jun-21 A 100% $6,000 $12,000 $ 0 $ 0 PARKIN 1211386 1996-May-27 2011-May-27 A 100% $ 800 $10,400 $ 506 $ 0 PARKIN 1013217 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1013393 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1013395 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1013396 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0
-4-
PARKIN 1042958 1988-Dec-12 2012-Dec-12 A 100% $ 400 $ 9,200 $ 0 $ 0 PARKIN 1042959 1988-Dec-12 2012-Dec-12 A 100% $ 399 $ 9,201 $ 0 $ 0 PARKIN 1042960 1988-Dec-12 2012-Dec-12 A 100% $ 400 $ 9,200 $ 0 $ 0 PARKIN 1043292 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1043293 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1043294 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1043295 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1043296 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1043297 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1043492 1989-Jan-26 2010-Jan-26 A 100% $ 147 $ 8,253 $ 0 $ 0 PARKIN 1043493 1989-Jan-26 2012-Jan-26 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1043497 1989-Jan-30 2012-Jan-30 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1043498 1989-Jan-30 2012-Jan-30 A 100% $ 400 $ 8,800 $ 0 $ 0 PARKIN 1117883 1991-Jan-25 2012-Jan-25 A 100% $ 400 $ 7,600 $ 0 $ 0 PARKIN 1117884 1991-Jan-25 2012-Jan-25 A 100% $ 400 $ 7,600 $ 0 $ 0 PARKIN 648539 1983-Mar-04 2012-Mar-04 A 100% $ 400 $11,200 $ 0 $ 0 PARKIN 648540 1983-Mar-04 2012-Mar-04 A 100% $ 400 $11,200 $ 518 $ 0 PARKIN 648547 1983-Mar-04 2012-Mar-04 A 100% $ 400 $11,200 $ 518 $ 0 PARKIN 648548 1983-Mar-04 2012-Mar-04 A 100% $ 400 $11,200 $ 518 $ 0 PARKIN 648699 1983-Mar-04 2012-Mar-04 A 100% $ 400 $11,200 $ 500 $ 0 PARKIN 648700 1983-Mar-04 2012-Mar-04 A 100% $ 400 $11,200 $ 518 $ 0 PARKIN 682108 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 0 $ 0
-5-
PARKIN 682109 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 42,893 $ 0 PARKIN 682110 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 7,058 $ 0 PARKIN 682111 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 0 $ 0 PARKIN 682112 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 79,293 $ 0 PARKIN 682113 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $120,479 $ 0 PARKIN 682278 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 0 $ 0 PARKIN 682279 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 0 $ 0 PARKIN 682280 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 500 $ 0 PARKIN 682281 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 0 $ 0 PARKIN 682282 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 48,023 $ 0 PARKIN 682283 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 53,293 $ 0 PARKIN 682284 1983-Mar-14 2012-Mar-14 A 100% $ 400 $11,200 $ 5,722 $ 0 PARKIN 894924 1986-Jun-12 2012-Jun-12 A 100% $ 400 $10,000 $ 0 $ 0 PARKIN 894925 1986-Jun-12 2012-Jun-12 A 100% $ 400 $10,000 $ 0 $ 0 PARKIN 994723 1987-Dec-23 2012-Dec-23 A 100% $ 400 $ 9,600 $ 0 $ 0 PARKIN 994724 1987-Dec-23 2012-Dec-23 A 100% $ 400 $ 9,600 $ 0 $ 0 PARKIN 994725 1987-Dec-23 2012-Dec-23 A 100% $ 400 $ 9,600 $ 0 $ 0 PARKIN 994726 1987-Dec-23 2012-Dec-23 A 100% $ 400 $ 9,600 $ 0 $ 0
SCHEDULE "B" TO THAT OPTION AGREEMENT BETWEEN JOHN AND MARIE BRADY AND WIDESCOPE RESOURCES INC. DATED ____________ ____, 2010 (THE "OPTION AGREEMENT") NET SMELTER ROYALTY TERMS AND CONDITIONS 1. The Net Smelter Royalty shall be equal to 2.5% Net Smelter Returns (as hereinafter defined) (subject to adjustment in accordance with section 5 of the Option Agreement) from any mine in production or put into production as a result of commencing commercial production on The Claims. 2. "Net Smelter Returns" means: (a) the actual proceeds received by the Optionee from any mint, smelter, refinery or other purchaser from the sale of ores, minerals, mineral substances, metals (including bullion) or concentrates (collectively "Product") produced from the Claims and sold or proceeds received from an insurer in respect of Product, after deducting from such proceeds the following charges to the extent that they were not deducted by the purchaser in computing payments: (i) smelting and refining charges; (ii) penalties, smelter assay costs and umpire assay costs; (iii)cost of freight and handling of ores, metals or concentrates from the Claims to any mint, smelter, refinery, or other purchaser; (iv) marketing costs; (v) costs of insurance in respect of Product; (vi) customs duties, severance tax, royalties, ad valorem or mineral taxes or the like and export and import taxes or tariffs payable in respect of the Product; and (b) if the Optionee is not the operator but holds a net smelter return royalty, the same as the net smelter return royalty held by the Optionee. 3. The Net Smelter Royalty will be: (a) calculated and paid on a quarterly basis within 45 days after the end of each quarter of the fiscal year for the mine (an "Operating Year"), based on the Net Smelter Returns for such quarter; -2- (b) each payment of Net Smelter Royalty will be accompanied by an unaudited statement indicating the calculation of the Royalty hereunder in reasonable detail and the Holder will receive, within three months of the end of each Operating Year, an annual summary unaudited statement (an "Annual Statement") showing in reasonable detail the calculation of the Royalty for the last completed Operating Year and showing all credits and deductions added to or deducted from the amount due to the Holder; (c) the holder (the "Holder") of the Net Smelter Royalty will have 45 days from the time of receipt of the Annual Statement to question the accuracy thereof in writing and, failing such objection, the Annual Statement will be deemed to be correct and unimpeachable thereafter; (d) if the Annual Statement is questioned by the Holder, and if such questions cannot be resolved between the Optionee and the Holder, the Holder will have 12 months from the time of receipt of the Annual Statement to have such audited, which will initially be at the expense of the Holder; (e) the audited Annual Statement will be final and determinative of the calculation of the Royalty for the audited period and will be binding on the parties and any overpayment of Royalty will be deducted by the Optionee from the next payment of Royalty and any underpayment of Royalty will be paid forthwith by the Optionee; (f) the costs of the audit will be borne by the Holder if the Annual Statement was accurate within 1% or overstated the Royalty payable by greater than 1% and will be borne by the Optionee if such statement understated the Royalty payable by greater than 1%. If the Optionee is obligated to pay for the audit it will forthwith reimburse the Holder for any of the audit costs which it had paid; (g) the Holder will be entitled to examine, on reasonable notice and during normal business hours, such books and records as are reasonably necessary to verify the payment of the Royalty to it from time to time, provided however that such examination shall not unreasonably interfere with or hinder the Optionee's operations or procedures; and (h) if the Optionee's interest in the Claims is a Net Smelter Return royalty, the Optionee's accounting and reporting obligations to the Holder under this paragraph 3 will be limited to the delivery of such documentation as the Optionee receives from the operator of the Claims in respect of the payment by such operator of Net Smelter Returns to the Optionee. 4. Notwithstanding the provisions of section 3 hereof, the Optionee shall pay advances on account of the Net Smelter Royalty in the amount of $5,000 per annum, payable semi-annually on August 1 and February 1 of each year, commencing as of August 1, 2013, which amounts when paid shall serve to reduce any amounts otherwise payable under section 3 hereof. 5. The determination of the Royalty hereunder is based on the premise that production will be developed solely from the Claims. If the Claims and one or more other properties are incorporated in a single mining project and metals, ores or concentrates pertaining to each are not readily segregated on a practical or equitable basis, the allocation of actual proceeds received and -3- deductions therefrom will be negotiated between the parties and, if the parties fail to agree on such allocation, such will be referred to arbitration pursuant to paragraph 5 of this Agreement. In such arbitration the arbitrator will make reference to this Agreement and to practices used in mining operations that are of a similar nature. The arbitrator will be entitled to retain such independent mining consultants as he considers necessary. The decision of the arbitrator will be final and binding on the parties. 6. Any matters in this Agreement which are to be settled by arbitration will be subject to the following: (a) any matter required or permitted to be referred to arbitration pursuant to this Agreement will be determined by a single arbitrator to be appointed by the parties hereto; (b) any party may refer any such matter to arbitration by written notice to the other and, within 10 days after receipt of such notice, the parties will agree on the appointment of an arbitrator. No person will be appointed as an arbitrator hereunder unless such person agrees in writing to act; (c) if the parties cannot agree on a single arbitrator as provided in subparagraph (b), either party may submit the matter to arbitration (before a single arbitrator) in accordance with the ARBITRATION ACT of the Province of British Columbia (the "Act"); and (d) except as specifically provided in this paragraph, an arbitration hereunder will be conducted in accordance with the Act. The arbitrator will fix a time and place in Vancouver, British Columbia for the purpose of hearing the evidence and representations of the parties and he will preside over the arbitration and determine all questions of procedure not provided for under such Act or this paragraph. After hearing any evidence and representations that the parties may submit, the arbitrator will make an award and reduce the same to writing and deliver one copy thereof to each of the parties. The decision of the arbitrator will be made within 45 days after his appointment, subject to any reasonable delay due to unforeseen circumstances. The expense of the arbitration will be paid as specified in the award. The parties agree that the award of the single arbitrator will be final and binding upon each of them and will not be subject to appeal. 7. The holding of the Royalty will not confer upon the holder thereof any legal or beneficial interest in the Claims. The right to receive a percentage of Net Smelter Returns as and when due is and will be deemed to be a contractual right only. The right to receive a percentage of Net Smelter Returns as and when due will not be deemed to constitute the Holder the partner, agent or legal representative of the Optionee. 8. The Optionee may, if it is the operator of the Claims, but will not be under any duty to, engage in price protection (hedging) or speculative transactions such as futures contracts and commodity options in its sole discretion covering all or part of production from the Claims and, except in the case where Products are actually delivered and a sale is actually consumed under such price protection or speculative transactions, none of the revenues, costs, profits or losses from such transaction will be taken into account in calculating Net Smelter Returns or any interest therein; provided however, that if the Optionee delivers Product under a price protection or speculative program where the -4- proceeds derived therefrom are less than those that would have been received had the Product been sold at the spot price in effect at the time of sale, the Royalty payable to the Holder will be based on such spot price. 9. The Optionee shall have a Right of First Refusal on the proposed sale by the Holder of all or part of the Royalty as follows: (a) if the Holder (in this paragraph called the "Offeror") intends to sell all or part of the Royalty (in this paragraph the "Interest") it will first give notice in writing to the Optionee (in this paragraph called the "Offeree") of such intention together with the terms and conditions on which the Offeror intends to sell the Interest; (b) any communication of an intention to sell pursuant to this paragraph will be in writing delivered in accordance with paragraph 13 hereof and will set out fully and clearly all of the terms and conditions of any intended sale and such communication will be deemed to constitute an offer (the "Offer") by the Offeror to the Offeree to sell the Interest to the Offeree on the terms and conditions set out in such Offer; (c) any Offer made as contemplated in this paragraph will be open for acceptance by the Offeree for a period of 60 days from the date of receipt of the Offer by the Offeree; (d) if the Offeree accepts the Offer within the time provided in subparagraph (c), such acceptance will constitute a binding agreement of purchase and sale between the Offeror and the Offeree for the Interest on the terms and conditions set out in the Offer; and (e) if the Offeree does not accept the Offer within the time prescribed, the Offeror may complete the sale of the Interest on the terms and conditions set out in the Offer or on terms and conditions substantially similar to, but no more favourable than, the terms and conditions set out in the Offer, within 90 days from the expiration of the right of the Offeree to accept such Offer or the Offeror must again comply with the provisions of this paragraph. 10. The operator of the Claims, whether or not it is the Optionee, will be entitled to: (a) make all operational decisions with respect to the methods and extent of mining and processing of ore, concentrate, dore, metal and products produced from the Claims; (b) make all decisions relating to sales of such concentrate, dore, metal and products produced; and (c) make all decisions concerning temporary or long-term cessation of operations. 11. All capitalized terms not otherwise defined herein shall have the meaning given to them in the Option Agreement to which these Terms and Conditions form Schedule "B". EX-10.4 5 ex10-4.txt PROPERTY OPTION AGREEMENT Exhibit 10.4 PROPERTY OPTION AGREEMENT THIS made and entered into as of the ___ day of __________, 2010. BETWEEN: JOHN AND MARIE BRADY, 1227 Holland Road, Sudbury, Ontario, P3A 3R1 (the "Bradys") and DAVID BEILHARTZ, 49 Airport Road, Whitefish, Ontario, P0M 3E0 ("Beilhartz"); (the Bradys and Beilhartz herein together "Optionors") OF THE FIRST PART AND: WIDESCOPE RESOURCES INC., a company having an office at Suite 208-828 Harbourside Drive, North Vancouver, British Columbia, V7P 3R9 (herein "Optionee") OF THE SECOND PART WHEREAS the Optionors have represented that collectively they are the sole beneficial owners in and to those mineral claims in Ontario (the "Claims") as more particularly described in Schedule "A" attached hereto and collectively referred to as the Woods Creek Property as to 50% by the Bradys and 50% by Beilhartz; AND WHEREAS the Optionors, subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof, now wishes to grant to the Optionee the exclusive right and option to acquire an undivided 100% right, title and interest in and to the Claims on the terms and conditions hereinafter set forth; NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises, the mutual covenants herein set forth and the sum of One Dollar ($1.00) of lawful money of Canada now paid by the Optionee to the Optionors (the receipt whereof is hereby acknowledged), the Parties hereto do hereby mutually covenant and agree as follows: 1. Definitions The following words, phrases and expressions shall have the following meanings: (a) "After Acquired Properties" means any and all mineral interests staked, located, granted or acquired by or on behalf of either of the parties hereto during the currency of this Agreement which are -2- located, in whole or in part, within five kilometres of the perimeter of the Claims; (b) "Expenditures" includes all direct or indirect expenses [net of government incentives and net of payments to the Optionors pursuant to Section 4 hereof] of or incidental to Mining Operations provided that such expenses must relate to work on the Claims as is acceptable to the MNDM for the purposes of keeping the Claims in good standing. The certificate of the Controller or other financial officer of the Optionee, together with a statement of Expenditures in reasonable detail shall be prima facie evidence of such Expenditures; (c) "Facilities" means all mines and plants, including without limitation, all pits, shafts, adits, haulageways, raises and other underground workings, and all buildings, plants, facilities, and other structures, fixtures, and improvements, and all other property, whether fixed or moveable, as the same may exist at any time in, or on the Claims and relating to the operator of the Claims as a mine or outside the Claims if for the exclusive benefit of the Claims only; (d) "Force Majeure" means an event beyond the reasonable control of the Optionee that prevents or delays it from conducting the activities contemplated by this Agreement other than the making of payments referred to in Section 0 herein. Such events shall include but not be limited to acts of God, war, insurrection, action or inaction of governmental agencies, inability to obtain any environmental, operating or other permits or approvals, authorizations or consents and inclement weather conditions; (e) "Mineral Products" means the commercial end products derived from operating the Claims as a mine; (f) "Mineral Rights" means the right to all minerals on, in or under the Claims; (g) "Mining Operations" includes: (i) every kind of work done on or with respect to the Claims or the mineral products derived therefrom by or under the direction of the Optionee; and (ii) without limiting the generality of the foregoing, includes the work of assessment, geophysical, geochemical and geological surveys, studies and mapping, investigating, drilling, designing, examining equipping, improving, surveying, shaft sinking, raising, cross-cutting and drifting, searching for, digging, trucking, sampling, working and procuring minerals, ores and metals, in surveying and bringing any mineral claims to lease or patent, in doing all other work usually considered to be prospecting, exploration, development, a feasibility study, mining work, milling, concentration, bonification or ores and concentrates, as well as the separation and extraction of Mineral Products; (h) "MNDM" means the Ontario Ministry of Northern Development and Mines; -3- (i) "Net Smelter Royalty" means that net smelter royalty as defined in Section 0 hereof; (j) "Option" means the option granted by the Optionors to the Optionee to acquire, subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof, an undivided 100% right, title and interest in and to the Claims; (k) "Option Period" means the period from the date hereof to the date at which the Optionee has performed its obligations to acquire its 100% interest in the Claims as set out in Section 0 hereof subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof; and (l) "Claims" means the mineral claims described in Schedule "A" together with such further claims contiguous to the claims described in Schedule "A" as the parties hereto have mutually agreed to be staked so as to become subject to the Option. 2. Headings Any heading, caption or index hereto shall not be used in any way in construing or interpreting any provision hereof. 3. Singular, Plural Whenever the singular or masculine or neuter is used in this Agreement, the same shall be construed as meaning plural or feminine or body politic or corporate or vice versa, as the context so requires. 4. Option The Optionors hereby grant to the Optionee the sole and exclusive right and option (the "Option") to earn a 100% interest in the Claims, subject to the Net Smelter Royalty reserved to the Optionors and the obligations under section 10(g) hereof, exercisable as follows (it being acknowledged that all cash payments and share issuances provided for herein are to be made as to 50% to the Bradys and 50% to Beilhartz): (a) the Optionee paying the sum of $7,500 to the Optionors by way of cash and issuing 150,000 common shares of the Optionee to the Optionors forthwith upon execution of this Agreement (the "Execution Date"); (b) on or before that date which is 12 months following the Execution Date the Optionee incurring $24,000 of Expenditures, paying a further $15,000 to the Optionors and issuing to the Optionors a further 150,000 common shares of the Optionee; (c) on or before that date which is 24 months following the Execution Date the Optionee, incurring a further $24,000 of Expenditures and paying a further $20,000 to the Optionors; -4- (d) on or before that date which is 36 months following the Execution Date the Optionee incurring a further $24,000 of Expenditures and paying a further $45,000 to the Optionors; and upon the Optionee having satisfied the obligations set forth above, the Optionee shall be deemed to have exercised the Option (the "Exercise Date") and shall be entitled to an undivided 100% right, title and interest in and to the Claims with the full right and authority to equip the Claims for production and operate the Claims as a mine subject to the rights of the Optionors to the Net Smelter Royalty and subject to the obligations under section 10(g) hereof. Always provided that if any of the obligations set forth above are not satisfied on or before the date stipulated, the Optionee shall without losing any rights under this Agreement have a further thirty (30) days to satisfy any such obligation. In connection with the incurring of the Expenditures and as a condition thereof, the Optionee agrees to file with the MNDM all eligible work performed on the Claims within 90 days of the completion of each phase of work. 5. Net Smelter Royalty The transfer of the Mineral Rights by the Optionors is subject to the Optionors retaining a 2.5% Net Smelter Royalty (with a 50% undivided interest being held by each of the Bradys and Beilhartz) with respect to the production from the Claims having the following attributes: (a) the terms and conditions of the Net Smelter Royalty shall be as set forth in schedule B hereto; (b) the Optionee shall have the right to repurchase sixty percent of the Net Smelter Royalty (1.5%) for $1,500,000 at any time prior to the first anniversary date of the commencement of commercial production on the Claims; and (c) the Optionee shall be obligated to pay advances on the Net Smelter Royalty of $5,000 per annum, payable as to $2,500 on August 1 and February 1 of each year commencing August 1, 2013 which amounts, for greater certainty shall serve to reduce any amounts otherwise payable on account of the Net Smelter Royalty. 6. Transfer of Title Upon execution of this Agreement, the Optionors will deliver or cause to be delivered to the Optionee, a duly executed transfer of the Claims in favour of the Optionee (the "Optionee Transfer") to be held in trust by said solicitors subject to the terms and conditions of this Agreement. The Optionee shall be entitled to record the Optionee Transfer with the appropriate government offices to effect transfer of legal title of the Claims into its own name at any time following the Exercise Date provided that in the event the Optionee Transfer is recorded the Optionors shall be entitled to record notice of their interest in the Net Smelter Royalty. -5- 7. Assignment During the Option Term, no party shall sell, transfer, assign, mortgage, pledge or otherwise encumber its interest in this Agreement or its right or interest in the Claims without the consent of the other parties, such consent to be not unreasonably withheld, provided that any party shall be permitted to assign this Agreement to an "affiliate" or "associate" as those terms are defined in THE BUSINESS CORPORATIONS ACT (British Columbia). It will be a condition of any assignment under this Agreement that such assignee shall agree in writing to be bound by the terms of this Agreement applicable to the assignor. The Optionee shall have the right at any time during the term of this Agreement to relinquish its rights to earn an interest in one or more of the Claims or to reduce the size of one or more of the Claims, in accordance with the laws of Ontario, by providing written notice to the Optionors. Pursuant to any such relinquishment the Claims relinquished shall be returned to the Optionor with sufficient work applied to them such that they are in good standing for a period of twelve (12) months from the date of relinquishment. Following any such relinquishment or reduction in size, the Optionee will have no obligation to incur any further exploration and development expenditures on the portion of the Property relinquished or, in the case of a claims that has been reduced in size, on the portion of such claim that has been dropped. 8. Termination This Agreement shall forthwith terminate in circumstances where: (a) the Optionee fails to make the payments for or carry out the Expenditures required in Sections 0 of this Agreement on or before the dates set out herein provided that, in circumstances where the Optionee is prevented from carrying out any of the Expenditures contemplated in Sections 0 prior to the dates set out therein due to Force Majeure, then the Optionee shall forthwith give the Optionors written notice of the commencement and termination of the said Force Majeure and thereafter such dates shall be deemed to have been extended by the period of time during which the Force Majeure remains in effect; (b) the Optionee gives 3 months notice of termination to the Optionors which it shall be at liberty to do at any time after the execution of this Agreement and the payment of the amount set forth in clause 0 hereof; (c) this Agreement is terminated in accordance with the provisions of section 0 herein; or (d) the parties mutually agree in writing; and in circumstances where this Agreement terminates prior to the Exercise Date the Optionee shall execute all such documents and do all such things as necessary to transfer legal title to the Claims back to the Optionors. -6- 9. Representations, Warranties and Covenants of the Optionors The Optionors jointly represent, warrant and covenant to and with the Optionee as follows: (a) neither the execution and delivery of this Agreement, nor any of the agreements referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with, result in the breach of or accelerate the performance required by, any agreement to which they are a party; (b) the Claims are accurately described in Schedule "A", are in good standing under the laws of the jurisdiction in which it is located and are free and clear of all liens, charges and encumbrances other than those of which the Optionee has been advised in writing; (c) the Claims have been operated substantially in accordance with all applicable and environmental laws and, to the knowledge of the Optionors there are no environmental conditions existing on the Claims to which any material remedial action is required or any material liability has or may be imposed under applicable environmental law; (d) the Optionors are the sole beneficial owners of the Claims and have the exclusive right to enter into this Agreement and all necessary authority to transfer their interest in the Claims in accordance with the terms of this Agreement; (e) no person, firm or corporation has any proprietary or possessory interest in the Claims other than the Optionors, and no person, firm or corporation is entitled to any royalty or other payment in the nature of rent or royalty on any minerals, ores, metals or concentrates or any other such products removed from the Claims; (f) upon request by the Optionee, and at the sole cost of the Optionee, the Optionors shall deliver or cause to be delivered to the Optionee copies of all available maps and other documents and data in their possession respecting the Claims; and (g) during the currency of this Agreement, the Optionors will: (i) not do any act or thing which would or might in any way adversely affect the rights of the Optionee hereunder; (ii) not relinquish or abandon all or any part of their interest in the Claims; (iii)not mortgage, pledge or encumber the Claims after the Effective Date without the Optionee's prior written consent; and (iv) give the Optionee such access to the Property, at all times at its own risk and expense, as the Optionee shall determine, acting reasonably, is necessary to enable it to carry out the terms of this Agreement. -7- 10. Representations, Warranties and Covenants of the Optionee The Optionee represents, warrants and covenants to and with the Optionors that: (a) the Optionee is a company duly organized validly existing and in good standing under the laws of the Province of British Columbia; (b) the Optionee has full power and authority to carry on its business and to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement; (c) neither the execution and delivery of this Agreement, nor any of the agreements referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with, result in the breach of or accelerate the performance required by, any agreement to which it is a party; (d) the execution and delivery of this Agreement and the agreements contemplated hereby will not violate or result in the breach of the laws of any jurisdiction applicable or pertaining thereto or of its constating documents; (e) this Agreement constitutes a legal, valid and binding obligation of the Optionee; (f) the Optionee shall use its reasonable best efforts to limit the resale restrictions to which the common shares of the Optionee issuable to the Optionors pursuant to Section 0 hereof would be subject to the minimum restrictions provided for under applicable securities laws; (g) both during and after the Option Period, the Optionee will keep the Claims in good standing, free and clear of all liens, charges and encumbrances and in connection therewith shall make all such payments, including, but not limited to taxes and filing fees as shall be necessary and including meeting all of the MNDM minimum yearly assessment work requirements and qualified expenditures thereof in order to keep the Claims in good standing, failing which the Optionee shall take all such steps as shall be necessary to reconvey the Claims to the Optionors; and (h) the Optionee will carry out all Mining Operations on the Claims in a miner-like fashion and will obtain all licenses and permits as shall be necessary to enable it to carry out the terms of this Agreement. 11. Indemnity and Survival of Representations The representations and warranties hereinbefore set out are conditions on which the parties have relied in entering into this Agreement and shall survive the acquisition of any interest in the Claims by the Optionee and each of the parties will indemnify and save the other harmless from all loss, damage, costs, actions and suits arising out of or in connection with any breach of any representation, warranty, covenant, agreement or condition made by them and contained in this Agreement. -8- The Optionee agrees to indemnify and save harmless the Optionors from any liability to which it may be subject arising from any Mining Operations carried out by the Optionee or at is direction on the Claims. 12. Confidentiality The parties hereto agree to hold in confidence all information obtained in confidence in respect of the Claims or otherwise in connection with this Agreement other than in circumstances where a party has an obligation to disclose such information in accordance with applicable securities legislation, in which case such disclosure shall only be made after consultation with the other party. 13. Notice All notices, consents, demands and requests (in this Section 0 called the "Communication") required or permitted to be given under this Agreement shall be in writing and may be delivered personally sent by telegram, by telex or telecopier or other electronic means or may be forwarded by first class prepaid registered mail to the parties at their addresses first above written. Any Communication delivered personally or sent by telegram, telex or telecopier or other electronic means shall be deemed to have been given and received on the second business day next following the date of sending. Any Communication mailed as aforesaid shall be deemed to have been given and received on the fifth business day following the date it is posted, addressed to the parties at their addresses first above written or to such other address or addresses as either party may from time to time specify by notice to the other; provided, however, that if there shall be a mail strike, slowdown or other labour dispute which might affect delivery of the Communication by mail, then the Communication shall be effective only if actually delivered. 14. Further Assurances Each of the parties to this Agreement shall from time to time and at all times do all such further acts and execute and deliver all further deeds and documents as shall be reasonably required in order fully to perform and carry out the terms of this Agreement. 15. Entire Agreement The parties hereto acknowledge that they have expressed herein the entire understanding and obligation of this Agreement and it is expressly understood and agreed that no implied covenant, condition, term or reservation, shall be read into this Agreement relating to or concerning any matter or operation provided for herein. 16. Proper Law and Arbitration This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein. The parties hereto hereby irrevocably attorn to the jurisdiction of the Courts of British Columbia. All disputes arising out of or in connection with this Agreement, or in respect of any defined legal relationship associated therewith -9- or derived therefrom, shall be referred to and finally resolved by a sole arbitrator by arbitration under the rules of THE ARBITRATION ACT of British Columbia. 17. Enurement This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. 18. After Acquired Properties The parties covenant and agree, each with the other, that any and all After Acquired Properties shall be subject to the terms and conditions of this Agreement and shall, subject to the provisions hereof, be added to and deemed, for the purposes hereof, to be included in the Claims. In this regard any costs incurred by the Optionee in staking, locating, recording or otherwise acquiring any "After Acquired Properties" will be borne by the Optionee. In circumstances where the Optionors stake, locate, record or otherwise acquire any "After Acquired Properties" they shall so notify the Optionee and, provided that the Optionee reimburses the Optionors for all actual costs related thereto, as set forth by the Optionors in writing, such After Acquired Properties shall be added to and deemed, for the purposes hereof, to be included in the Claims. 19. Excess Work Credits It is acknowledged that there may be excess work credits (the "Excess Credits") on file with MNDM in relation to the Claims as at the date hereof and in such case it is acknowledged and agreed that the Optionors retain title to such Excess Credits and may remove or use them as they in their sole discretion may decide; provided that in removing or using such Excess Credits the Optionors shall always ensure that sufficient Excess Credits remain in place to ensure that the Claims remain in good standing for a period of 12 months from the date of such removal or use. 20. Default Notwithstanding anything in this Agreement to the contrary if any party (a "Defaulting Party") is in default of any requirement herein set forth the party affected by such default shall give written notice to the Defaulting Party specifying the default and the Defaulting Party shall not lose any rights under this Agreement, unless thirty (30) days after the giving of notice of default by the affected party the Defaulting Party has failed to take reasonable steps to cure the default by the appropriate performance and if the Defaulting Party fails within such period to take reasonable steps to cure any such default, the affected party shall be entitled to seek any remedy it may have on account of such default including, without limiting, termination of this Agreement. 21. Technical Data In circumstances where this Agreement is terminated prior to the Exercise Date, the Optionee shall deliver over to the Optionors all technical data and other documents and information then in its possession respecting the Claims and the Mineral Rights. -10- 22. Payment All references to monies hereunder shall be in Canadian funds. 23. Option Only This is an option only and except as herein specifically provided otherwise, nothing herein contained shall be construed as obligating the Optionee to do any acts or make any payments hereunder, and any act or acts or payment or payments as shall be made hereunder shall not be construed as obligating the Optionee to do any further act or make any further payment or payments. 24. Supersedes Previous Agreements This Agreement supersedes and replaces all previous oral or written agreements, memoranda, correspondence or other communications between the parties hereto relating to the subject matter hereof. -11- IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement effective as of the ____ day of _______________, 2010. WIDESCOPE RESOURCES INC. Per: ------------------------------------------- Authorized Signatory - ----------------------------------------------- JOHN BRADY - ----------------------------------------------- MARIE BRADY - ----------------------------------------------- DAVID BEILHARTZ SCHEDULE "A" CLAIMS LIST FOR WOODS CREEK PROPERTY Claim Number Recording Date Good To Date Work Amt Due Work Filed Other - ------------ -------------- ------------ ------------ ---------- ----- 1242388 2001-Jan-12 2013-Jan-12 $3,354 $67,046 1242389 2001-Jan-12 2012-Jan-12 $4,800 $43,200 1242390 2001-Jan-12 2011-Jan-12 $6,000 $48,000 1242391 2001-Jan-12 2012-Jan-12 $2,400 $21,600 1242392 2001-Jan-12 2010-Jan-12 $6,400 $44,800 SCHEDULE "B" TO THAT OPTION AGREEMENT BETWEEN JOHN AND MARIE BRADY, DAVID BEILHARTZ AND WIDESCOPE RESOURCES INC. DATED ____________ ____, 2010 (THE "OPTION AGREEMENT") NET SMELTER ROYALTY TERMS AND CONDITIONS 1. The Net Smelter Royalty shall be equal to 2.5% Net Smelter Returns (as hereinafter defined) (subject to adjustment in accordance with section 5 of the Option Agreement) from any mine in production or put into production as a result of commencing commercial production on The Claims. 2. "Net Smelter Returns" means: (a) the actual proceeds received by the Optionee from any mint, smelter, refinery or other purchaser from the sale of ores, minerals, mineral substances, metals (including bullion) or concentrates (collectively "Product") produced from the Claims and sold or proceeds received from an insurer in respect of Product, after deducting from such proceeds the following charges to the extent that they were not deducted by the purchaser in computing payments: (i) smelting and refining charges; (ii) penalties, smelter assay costs and umpire assay costs; (iii)cost of freight and handling of ores, metals or concentrates from the Claims to any mint, smelter, refinery, or other purchaser; (iv) marketing costs; (v) costs of insurance in respect of Product; (vi) customs duties, severance tax, royalties, ad valorem or mineral taxes or the like and export and import taxes or tariffs payable in respect of the Product; and (b) if the Optionee is not the operator but holds a net smelter return royalty, the same as the net smelter return royalty held by the Optionee. 3. The Net Smelter Royalty will be: (a) calculated and paid on a quarterly basis within 45 days after the end of each quarter of the fiscal year for the mine (an "Operating Year"), based on the Net Smelter Returns for such quarter; -2- (b) each payment of Net Smelter Royalty will be accompanied by an unaudited statement indicating the calculation of the Royalty hereunder in reasonable detail and the Holder will receive, within three months of the end of each Operating Year, an annual summary unaudited statement (an "Annual Statement") showing in reasonable detail the calculation of the Royalty for the last completed Operating Year and showing all credits and deductions added to or deducted from the amount due to the Holder; (c) the holder (the "Holder") of the Net Smelter Royalty will have 45 days from the time of receipt of the Annual Statement to question the accuracy thereof in writing and, failing such objection, the Annual Statement will be deemed to be correct and unimpeachable thereafter; (d) if the Annual Statement is questioned by the Holder, and if such questions cannot be resolved between the Optionee and the Holder, the Holder will have 12 months from the time of receipt of the Annual Statement to have such audited, which will initially be at the expense of the Holder; (e) the audited Annual Statement will be final and determinative of the calculation of the Royalty for the audited period and will be binding on the parties and any overpayment of Royalty will be deducted by the Optionee from the next payment of Royalty and any underpayment of Royalty will be paid forthwith by the Optionee; (f) the costs of the audit will be borne by the Holder if the Annual Statement was accurate within 1% or overstated the Royalty payable by greater than 1% and will be borne by the Optionee if such statement understated the Royalty payable by greater than 1%. If the Optionee is obligated to pay for the audit it will forthwith reimburse the Holder for any of the audit costs which it had paid; (g) the Holder will be entitled to examine, on reasonable notice and during normal business hours, such books and records as are reasonably necessary to verify the payment of the Royalty to it from time to time, provided however that such examination shall not unreasonably interfere with or hinder the Optionee's operations or procedures; and (h) if the Optionee's interest in the Claims is a Net Smelter Return royalty, the Optionee's accounting and reporting obligations to the Holder under this paragraph 3 will be limited to the delivery of such documentation as the Optionee receives from the operator of the Claims in respect of the payment by such operator of Net Smelter Returns to the Optionee. 4. Notwithstanding the provisions of section 3 hereof, the Optionee shall pay advances on account of the Net Smelter Royalty in the amount of $5,000 per annum, payable semi-annually on August 1 and February 1 of each year, commencing as of August 1, 2013, which amounts when paid shall serve to reduce any amounts otherwise payable under section 3 hereof. 5. The determination of the Royalty hereunder is based on the premise that production will be developed solely from the Claims. If the Claims and one or more other properties are incorporated in a single mining project and metals, ores or concentrates pertaining to each are not readily segregated on a practical or equitable basis, the allocation of actual proceeds received and -3- deductions therefrom will be negotiated between the parties and, if the parties fail to agree on such allocation, such will be referred to arbitration pursuant to paragraph 5 of this Agreement. In such arbitration the arbitrator will make reference to this Agreement and to practices used in mining operations that are of a similar nature. The arbitrator will be entitled to retain such independent mining consultants as he considers necessary. The decision of the arbitrator will be final and binding on the parties. 6. Any matters in this Agreement which are to be settled by arbitration will be subject to the following: (a) any matter required or permitted to be referred to arbitration pursuant to this Agreement will be determined by a single arbitrator to be appointed by the parties hereto; (b) any party may refer any such matter to arbitration by written notice to the other and, within 10 days after receipt of such notice, the parties will agree on the appointment of an arbitrator. No person will be appointed as an arbitrator hereunder unless such person agrees in writing to act; (c) if the parties cannot agree on a single arbitrator as provided in subparagraph (b), either party may submit the matter to arbitration (before a single arbitrator) in accordance with the ARBITRATION ACT of the Province of British Columbia (the "Act"); and (d) except as specifically provided in this paragraph, an arbitration hereunder will be conducted in accordance with the Act. The arbitrator will fix a time and place in Vancouver, British Columbia for the purpose of hearing the evidence and representations of the parties and he will preside over the arbitration and determine all questions of procedure not provided for under such Act or this paragraph. After hearing any evidence and representations that the parties may submit, the arbitrator will make an award and reduce the same to writing and deliver one copy thereof to each of the parties. The decision of the arbitrator will be made within 45 days after his appointment, subject to any reasonable delay due to unforeseen circumstances. The expense of the arbitration will be paid as specified in the award. The parties agree that the award of the single arbitrator will be final and binding upon each of them and will not be subject to appeal. 7. The holding of the Royalty will not confer upon the holder thereof any legal or beneficial interest in the Claims. The right to receive a percentage of Net Smelter Returns as and when due is and will be deemed to be a contractual right only. The right to receive a percentage of Net Smelter Returns as and when due will not be deemed to constitute the Holder the partner, agent or legal representative of the Optionee. 8. The Optionee may, if it is the operator of the Claims, but will not be under any duty to, engage in price protection (hedging) or speculative transactions such as futures contracts and commodity options in its sole discretion covering all or part of production from the Claims and, except in the case where Products are actually delivered and a sale is actually consumed under such price protection or speculative transactions, none of the revenues, costs, profits or losses from such transaction will be taken into account in calculating Net Smelter Returns or any interest therein; provided however, that if the Optionee delivers Product under a price protection or speculative program where the -4- proceeds derived therefrom are less than those that would have been received had the Product been sold at the spot price in effect at the time of sale, the Royalty payable to the Holder will be based on such spot price. 9. The Optionee shall have a Right of First Refusal on the proposed sale by the Holder of all or part of the Royalty as follows: (a) if the Holder (in this paragraph called the "Offeror") intends to sell all or part of the Royalty (in this paragraph the "Interest") it will first give notice in writing to the Optionee (in this paragraph called the "Offeree") of such intention together with the terms and conditions on which the Offeror intends to sell the Interest; (b) any communication of an intention to sell pursuant to this paragraph will be in writing delivered in accordance with paragraph 13 hereof and will set out fully and clearly all of the terms and conditions of any intended sale and such communication will be deemed to constitute an offer (the "Offer") by the Offeror to the Offeree to sell the Interest to the Offeree on the terms and conditions set out in such Offer; (c) any Offer made as contemplated in this paragraph will be open for acceptance by the Offeree for a period of 60 days from the date of receipt of the Offer by the Offeree; (d) if the Offeree accepts the Offer within the time provided in subparagraph (c), such acceptance will constitute a binding agreement of purchase and sale between the Offeror and the Offeree for the Interest on the terms and conditions set out in the Offer; and (e) if the Offeree does not accept the Offer within the time prescribed, the Offeror may complete the sale of the Interest on the terms and conditions set out in the Offer or on terms and conditions substantially similar to, but no more favourable than, the terms and conditions set out in the Offer, within 90 days from the expiration of the right of the Offeree to accept such Offer or the Offeror must again comply with the provisions of this paragraph. 10. The operator of the Claims, whether or not it is the Optionee, will be entitled to: (a) make all operational decisions with respect to the methods and extent of mining and processing of ore, concentrate, dore, metal and products produced from the Claims; (b) make all decisions relating to sales of such concentrate, dore, metal and products produced; and (c) make all decisions concerning temporary or long-term cessation of operations. 11. All capitalized terms not otherwise defined herein shall have the meaning given to them in the Option Agreement to which these Terms and Conditions form Schedule "B". EX-10.5 6 ex10-5.txt AGREEMENT OF PURCHASE & SALE Exhibit 10.5 WIDESCOPE RESOURCES INC. April 5, 2010 VMS Ventures Inc. #301 - 260 West Esplanade, North Vancouver, BC V7M 3G7 Attention: Richard J. Mark, CEO Dear Sirs: Re: Agreement of Purchase and Sale (the "Agreement") between Widescope Resources Inc. (the "Purchaser") and VMS Ventures Inc. (the "Vendor") This Agreement will confirm our understanding that the Vendor is the sole legal and beneficial owner of a one hundred (100%) percent right, title and interest in and to those three groups of Claims (as defined below) located in Manitoba and more particularly known as the South Bay Property, the Thompson North Property and the Cedar Lake Property (each a "Property" and collectively the "Properties") and the Vendor has now agreed to sell and the Purchaser has agreed to purchase a one hundred percent (100%) right, title and interest in and to the Claims, on the terms and conditions hereinafter set forth subject to a two percent (2%) net smelter returns royalty reserved by the Vendor (the "NSR" as specified in Paragraph 3(b)). 1) INTERPRETATION (a) In this Agreement and in the recitals and Schedules hereto, unless the context otherwise requires, the following expressions will have the following meanings: (i) "Affiliate" has the meaning specified in National Instrument 45-106 as of the date hereof; (ii) "Claims" means those certain mineral claims more particularly set forth and described in Schedule "A" attached hereto, together with all renewals or extensions thereof and all surface, water and ancillary or appurtenant rights attached or accruing thereto, and any leases or other forms of substitute or successor mineral title or interest granted, obtained or issued in connection with or in place of any such licenses (including, without limitation, any licenses staked and recorded to cover internal gaps or factions in respect of such ground); (iii)"Closing Date" means the date on which the sale and purchase of the Claims is completed as determined pursuant to Section 3; (iv) "Common Shares" means post-consolidation common voting shares in the capital stock of the Purchaser; and (v) "Exchange" means FINRA's OTCbb (or "OTCbb"). 2) REPRESENTATIONS AND WARRANTIES (a) Each of the Purchaser and the Vendor represents and warrants to the other that: (i) it is a body corporate duly formed, organized and validly subsisting under the laws of its incorporating jurisdiction; #208 - 828 Harbourside Drive, North Vancouver, BC V7P 3R9 Tel 604.904.8481 o Fax 604.904.9431 o Toll Free 1.888.602.2453 3573070.4 -5- (ii) it has full power and authority to carry on its business and to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement; (iii)the execution and delivery of this Agreement and any agreements contemplated hereby will not violate or result in the breach of the laws of any jurisdiction applicable or pertaining thereto or of its constating documents; and (iv) it is resident in Canada within the meaning of the INCOME TAX ACT (Canada). (b) The Vendor represents and warrants to, and covenants with, the Purchaser that: (i) it is duly qualified to acquire, explore and develop mineral claims in Manitoba; (ii) the Claims have been duly and validly staked and recorded pursuant to the laws of Manitoba, are accurately described in Schedule "A", are and will be in good standing until their respective expiry dates as set out in Schedule "A", and are free and clear of all liens, charges, and encumbrances of any nature, except for the NSR; (iii)the Vendor has the exclusive right to enter into this Agreement and to dispose of all interest in the Claims to the Purchaser, subject to the NSR, in accordance with the terms of this Agreement; (iv) the Vendor is the sole legal, beneficial and recorded owner of the Claims; (v) there are no outstanding agreements or options to acquire or purchase the Claims or any portion thereof, and no person, firm or corporation has any proprietary or possessor's interest in the Claims, and no person is entitled to any rent or royalty on the Claims or other payment in the nature of rent or royalty on any mineral products derived from the Claims, other than the NSR; (vi) the Purchaser may enter in, under or upon the Claims for all purposes of this Agreement without making any payment to, and without accounting to or obtaining the permission of, any other person other than any payment required to be made under this Agreement; (vii)there are no pending or threatened adverse claims, challenges actions, suits, disputes or proceedings regarding the Claims nor, to the best of its knowledge, is there any basis therefor; (viii) to the best of its knowledge, conditions on and relating to the Claims and operations conducted thereon are in compliance with all applicable laws, regulations or orders relating to environmental matters including, without limitation, waste disposal and storage; (ix) there are no outstanding orders or directions relating to environmental matters requiring any work, repairs, construction or capital expenditures with respect to the Claims and the conduct of the operations related thereto, nor has it received any notice of the same, and it is not aware of any basis on which any such orders or direction could be made; and (x) it is not aware of any material fact or circumstance which has not been disclosed to the Purchaser which should be disclosed in order to prevent the representations and warranties in this section from being misleading or which may be material in the Purchaser's decision to enter into this Agreement and acquire an interest in the Claims. #208 - 828 Harbourside Drive, North Vancouver, BC V7P 3R9 Tel 604.904.8481 o Fax 604.904.9431 o Toll Free 1.888.602.2453 3573070.4 -6- (c) The Purchaser represents and warrants to, and covenants with, the Vendor that: (i) it is duly incorporated and in good standing under the laws of British Columbia with respect to the filing of its annual reports; (ii) its Common Shares are quoted for trading on the Exchange; (iii)other than as previously disclosed to the Vendor, it is in good standing with respect to its filings with the Exchange, and with respect to its continuous reporting filing requirements with applicable Canadian securities regulators; (iv) the Shares (as defined below) when issued to the Vendor hereunder, will be issued as fully paid and non-assessable common shares, not subject to any trading or escrow restrictions, other than a hold period of four (4) months from the date of issuance of the Shares, as required by Canadian securities regulations, and such hold period must be noted by a legend on the certificates representing the Shares; (v) the issued share capital of the Purchaser is 10,883,452 common shares and 1,343,831 convertible preferred shares and, other than as disclosed in its public filings with the BC Securities Commission and the S.E.C. (the "Public Record") or disclosed in writing to the Purchaser there are no outstanding rights, options, warrants or other entitlements to acquire any common shares of the Purchaser; and (vi) the audited financial statements for the year ended December 31, 2008 and the unaudited financial statements for the fiscal period ending September 30, 2009 as found in the Public Record as true and complete in all material respects and present fairly the financial position of the Purchaser as at the date thereof. (d) The representations and warranties hereinbefore set out: (i) are true as at the date hereof and will be true as at the Closing Date, are conditions on which the parties have relied in entering into this Agreement, and will survive the acquisition of any interest in the Claims by the Purchaser, and each party will indemnify and save the other harmless from all loss, damage, costs, actions and suits arising out of or in connection with any breach of any representation, warranty, covenant, agreement or condition made by such party and contained in this Agreement; and (ii) will continue for a period of three (3) years after the Closing Date, and neither party will be entitled to assert any claim or action for a breach of a representation or warranty hereinbefore set out, unless it is commenced within such time period. 3) AGREEMENT TO PURCHASE (a) Upon and subject to the terms and conditions of this Agreement, the Vendor hereby irrevocably agrees to sell and the Purchaser hereby irrevocably agrees to purchase an undivided One Hundred Percent (100%) right, title and interest in and to the Claims, free and clear of all liens, charges, royalties, encumbrances and claims whatsoever, except for the NSR. The purchase price for the Claims shall be the sum of $361,000, payable as to a $1,000 cash deposit due forthwith upon execution of this Agreement and as #208 - 828 Harbourside Drive, North Vancouver, BC V7P 3R9 Tel 604.904.8481 o Fax 604.904.9431 o Toll Free 1.888.602.2453 3573070.4 -7- to $360,000 by the issuance of 6,000,000 post consolidation Common Shares of the Purchaser (the "Shares") at a deemed price of $0.06 per Share. The date of completion of the purchase and sale of the Claims (the "Closing Date") shall be such date as may be established by the Purchaser but shall in no event be later one hundred and twenty (120) days from the date of this Agreement. (b) The Vendor shall retain a two percent (2.0%) Net Smelter Return royalty (the "NSR" as hereinafter defined) on each of the Properties, which royalty the Vendor shall be entitled to register against title to the Properties to the extent permitted under the laws of Manitoba. "NET SMELTER RETURN" means the amount of money actually received from the sale of any production of ores including bulk samples mined or extracted from the Properties at any time (except such ores, minerals and metals as are removed for the purpose of making assays or tests) including after the date on which the Properties comes into commercial production or from the sale of the concentrates or other products derived therefrom less, to the extent that they were not deducted by the purchaser in determining the purchase price therefore, all treatment charges or penalties incurred with respect thereto; all costs or expenses incurred with respect to insurance, freight, trucking, handling, and/or sampling and assaying of ores, concentrates or other products in the case of ores and concentrates or other products; any federal, provincial or municipal tax or levy of a sales or value-added nature assessed against or payable by the vendor thereof; and, if applicable, any costs or expenses (including, without limitation, penalties) incurred with respect to custom smelting, refining or similar treatment of such ores, minerals, or metals. (c) The Purchaser shall have the option (the "BUY-OUT OPTION") to purchase fifty percent of the NSR in respect of each of the three Properties (namely one percent (1%) per Property) for consideration of $1,000,000 per Property thereby reducing the NSR to one percent (1.0%). The Buy-Out Option may be exercised by the Purchaser delivering a notice to the Vendor at any time on or before the first anniversary of the date of commencement of commercial production from the Property with respect to which the Buy-Out Option is being exercised. 4) CONDITIONS PRECEDENT The right of the Purchaser to acquire the Claims is subject to the following conditions precedent, to be satisfied on or before the Closing Date: (a) The Vendor shall provide all assistance reasonably required by the Purchaser to obtain any required regulatory acceptance of this Letter Agreement, including reasonable documentation, as determined by the Purchaser, necessary to obtain any required regulatory acceptance of this Agreement. (b) On or before the Closing Date the Purchaser shall have completed a private placement of post consolidation Common Shares at $0.05 with the Vendor so as to raise $500,000 and shall have completed a further private placement of units at $0.06 so as to raise a further $600,000 with each such unit to be comprised of one post consolidation Common Share and one Warrant having an exercise price of $0.06. (c) On or before the Closing Date the Purchaser shall have caused certain principals of the Purchaser to sell 800,000 post consolidation previously issued shares of the Purchaser to the Vendor at a price of $0.025 per share. (d) Effective as of the Closing Date the Purchaser shall have granted to the Vendor a pre-emptive right to subscribe for any additional securities to be issued by the Purchaser up to the Vendor's then pro rata interest in the #208 - 828 Harbourside Drive, North Vancouver, BC V7P 3R9 Tel 604.904.8481 o Fax 604.904.9431 o Toll Free 1.888.602.2453 3573070.4 -8- Purchaser, such pre-emptive right to be evidenced by an agreement in form satisfactory to the parties, acting reasonably (the "Pre-emptive Right Agreement"). (e) On or before the Closing Date the Purchaser shall have caused four nominees of the Vendor to have been elected and/or appointed to the board of directors of the Vendor, which board shall be constituted of a total of six directors. 5) CLOSING (a) On the Closing Date, the Vendor shall deliver or cause to be delivered to the Purchaser: (i) certified copy of directors resolutions of the Vendor approving this Agreement and the sale of the Claims to the Purchaser; (ii) a certificate of a senior officer of the Vendor certifying that the representations and warranties of the Vendor set out in Paragraphs 2(a) and (b) are true and correct as at the Closing Date; (iii)transfers and such other documents as are required to transfer the Claims to the Purchaser; (b) On the Closing Date, the Purchaser shall deliver or cause to be delivered to the Vendor: (i) certified copy of directors resolutions of the Purchaser approving this Agreement and transactions set out therein including the payment of the Purchase Price in Common Shares and the Pre-emptive Right Agreement; (ii) a certificate of a senior officer of the Purchaser certifying that all of the conditions precedent in Paragraph 4 have been satisfied and that the representations and warranties of the Purchaser set out in Paragraphs 2(a) and (c) are true and correct as at the Closing Date; (iii) the Shares as payment of the balance of the Purchase Price; and (iv) the Pre-emptive Right Agreement. 6) POST CLOSING CONVENANTS The parties shall use all commercially and reasonable efforts to: (a) secure a listing of the common shares of the Purchaser on the TSX Venture Exchange as soon as possible following the Closing Date; and (b) complete a private placement of shares or units of the Purchaser so as to raise an minimum of $3,000,000, a portion of which shall be done on a flow through basis, on terms and conditions acceptable to both parties, acting reasonably. #208 - 828 Harbourside Drive, North Vancouver, BC V7P 3R9 Tel 604.904.8481 o Fax 604.904.9431 o Toll Free 1.888.602.2453 3573070.4 -9- 7) OPERATOR The Purchaser shall have the right to appoint an operator on and in respect of the Claims and may appoint itself as operator. 8) INDEMNITY The Vendor agrees to indemnify and save harmless the Purchaser from and against all suits, claims, demands, losses and expenses that directly arise from the Vendor's activities on the Claims. 9) CONFIDENTIALITY OF INFORMATION Each party agrees that all information obtained hereunder will be the exclusive property of the parties and not publicly disclosed or used other than for the activities contemplated hereunder except as required by law or by the rules and regulations of any regulatory authority or stock exchange having jurisdiction or with the prior written consent of the other party, such consent not to be unreasonably withheld. 10) DEFAULT In the event that the Purchaser is in default of any of its obligations hereunder, the Purchaser will not lose any rights under this Agreement until the Vendor has given to the Purchaser notice of such default and the Purchaser does not take any reasonable steps to cure such default within thirty (30) days from the Purchaser's receipt of such notice. 11) NOTICE (a) Any notice, direction or other instrument required or permitted to be given under this Agreement will be in writing and may be given by the delivery of the same or by mailing the same by prepaid registered or certified mail or by sending the same by telecopier or other similar form of communication, in each case addressed to the addresses of the parties as set out on the first page of this Agreement, and if sent by telecopier, as follows: i) if to the Vendor at: Fax No.: (604) 986-2021 Attention: Mr. Richard J. Mark, CEO ii) if to the Purchaser at: Fax No.: (604) 904 9431 Attention: Mr. Douglas Ford, Director (b) Any notice, direction or other instrument aforesaid will, if delivered, be deemed to have been given and received on the day it was delivered; if telecopied, be deemed to have been given and received on the next business day following transmission; and if mailed, be deemed to have been given and received on the fifth day following the day of mailing, except in the event of disruption of the postal services, in which event notice will be deemed to be given and received only when actually received. (c) Any party may at any time give to the other, notice in writing of any change of address or telecopier number of the party giving such notice, and from and after the giving of such notice, the address or telecopier number #208 - 828 Harbourside Drive, North Vancouver, BC V7P 3R9 Tel 604.904.8481 o Fax 604.904.9431 o Toll Free 1.888.602.2453 3573070.4 -10- therein specified will be deemed to be the address or telecopier number of such party for the purposes of giving notice hereunder. 12) GENERAL (a) This Agreement constitutes the entire agreement between the parties and replaces and supersedes all prior agreements, memoranda, correspondence, communications, negotiations and representations, whether verbal or written, express or implied, statutory or otherwise between the parties with respect to the subject matter herein. (b) No modification or amendment to this Agreement may be made unless agreed to by the parties in writing. (c) The Vendor's interest and the Purchaser's interest in this Agreement and the Claims are not assignable, in whole or in part, provided that the Vendor shall be entitled to assign this Agreement, and the Claims to an Affiliate, upon notice in writing to the Purchaser, and provided that the Affiliate agrees to be bound by the terms of this Agreement. (d) The parties agree that neither this Agreement nor payment of any monies hereunder shall be construed as forming a partnership. (e) Time is of the essence of this Agreement. (f) The parties hereto agree that they and each of them will execute all documents and do all acts and things within their respective powers to carry out and implement the provisions or intent of this Agreement. (g) The headings to the respective sections herein will not be deemed part of this Agreement but will be regarded as having been used for convenience only. (h) All references to monies hereunder will be in Canadian funds. All payments to be made to any party hereunder will be made by cash, certified cheque or bank draft mailed or delivered to such party at its address for notice purposes as provided herein, or for the account of such party at such bank or banks in Canada as such party may designate from time to time by written notice. Said bank or banks will be deemed the agent of the designating party for the purpose of receiving, collecting and receipting such payment. (i) This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. (j) In the event any provision of this Agreement will be deemed invalid, unenforceable or void, in whole or in part, by any court of competent jurisdiction, the remaining terms and provisions will remain in full force and effect. (k) This Agreement will be governed and interpreted in accordance with the laws of British Columbia and the laws of Canada applicable therein. All actions arising from this Agreement will be commenced and prosecuted in the courts of British Columbia, sitting in the city of Vancouver, and the parties hereby attorn to the jurisdiction thereof. (l) This Agreement and the obligations of the Purchaser hereunder are in each case subject to the acceptance for filing of this Agreement by the Exchange, if required, on behalf of the Purchaser. #208 - 828 Harbourside Drive, North Vancouver, BC V7P 3R9 Tel 604.904.8481 o Fax 604.904.9431 o Toll Free 1.888.602.2453 3573070.4 -11- (m) This Agreement may be executed in any number of counterparts with the same effect as if all parties to this Agreement had signed the same document and all counterparts will be construed together and will constitute one and the same instrument and any facsimile signature shall be taken as an original. If the foregoing terms and conditions, and the attached schedules which form a part of this Agreement, accurately set out our mutual understandings, please indicate your acceptance by signing this letter where indicated below and returning to us the enclosed copy duly signed. Yours very truly, WIDESCOPE RESOURCES INC. Per: /s/ Douglas E. Ford ------------------------------------- Douglas E. Ford, Director Terms and conditions approved as of the date first above written. VMS VENTURES INC. Per: /s/ Richard Mark ------------------------------------- Richard Mark, President #208 - 828 Harbourside Drive, North Vancouver, BC V7P 3R9 Tel 604.904.8481 o Fax 604.904.9431 o Toll Free 1.888.602.2453 3573070.4 THIS IS SCHEDULE "A" TO THE AGREEMENT DATED JANUARY 21, 2010 Between: Widescope Resources Inc. -- and -- VMS Ventures Inc. DESCRIPTION OF CLAIMS Claim Number Claim Name Claim Recorded Expiry Date Area Grouping - ------------ ---------- -------------- ----------- ---- -------- EX-10.6 7 ex10-6.txt STOCK PURCHASE AGREEMENT Exhibit 10.6 STOCK PURCHASE AGREEMENT DATED AS OF APRIL 7, 2010 BY AND BETWEEN MADJAK MANAGEMENT LTD. ("PURCHASER") AND WIDESCOPE RESOURCES INC ("SELLER") STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT dated as of April 7, 2010 by and between Madjak Management Ltd., a corporation formed and existing under the laws of the Province of British Columbia, Canada ("Purchaser"), and Widescope Resources Inc., a corporation formed and existing under the laws of the Province of British Columbia, Canada ("Seller"). WITNESSETH: WHEREAS, Seller is the record holder and beneficial owner of seven million (7,000,000) common shares (the "Shares") of Outback Capital Inc. ("Outback"); and WHEREAS, Seller desires to sell, and Purchaser desires to purchase the Shares on the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the value, receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following terms have the meanings set forth below: "Action" means any action, complaint, petition, investigation, arbitration, suit or other proceeding, whether civil or criminal, at law or in equity, or before any arbitrator or Governmental Entity. "Affiliate" means a Person that directly, or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, the Person specified. "Agreement" means this Stock Purchase Agreement, as the same may be amended from time to time in accordance with the terms hereof. "Approval" means any approval, authorization, consent, qualification or registration, or extension, modification, amendment or waiver of any of the foregoing, required to be obtained from or any notice, statement or other communication required to be filed with or delivered to, any Governmental Entity.. "Business" means the business of exploring and developing mineral resource properties in Manitoba and related activities as currently carried on by Outback. "Closing" has the meaning set forth in Section 3.1. "Closing Date" has the meaning set forth in Section 3.2. "Confidential Information" means any information that the Seller have taken reasonable efforts to protect, in whatever form or medium, concerning Outback or the operations or affairs of the Business, excluding any such information which as of the date of this Agreement is generally known by the public, or becomes generally known by the public following the date of this Agreement. "Contract" means any agreement, arrangement, bond, commitment, franchise, indemnity, indenture, instrument, lease, license, security agreement, sale or purchase order, or understanding whether or not in writing. "Control" means any Person that holds or is one of a combination of Persons that holds a sufficient number of any of the securities of an issuer so as to affect materially the control of that issuer, or more than 20% of the outstanding voting securities of an issuer except where there is evidence showing that the holding of those securities does not affect materially the control of that issuer. "Cougar Agreement" means the Option and Agreement of Purchase and Sale between Cougar Minerals Corporation and Outback dated as of April 6, 2009. "Encumbrance" means any claim, charge, easement, encumbrance, lease, security interest, lien, pledge, restriction (whether on voting, sale, transfer, disposition or otherwise), except for any restrictions on transfer generally arising under any applicable Securities Law of any Governmental Entity; provided, however, that "Encumbrance" shall not include any such item that (i) is reflected or disclosed in the Financial Statements (ii) is not material in amount, (iii) constitutes a statutory lien arising in the ordinary course of business, (iv) does not singly or in the aggregate with other such items materially detract from the value of the property or materially detract from or interfere with the use of property in the ordinary conduct of the Business as presently conducted, or (v) would not otherwise constitute a Material Adverse Circumstance. "Environmental Law" means all applicable Laws related to the protection of the environment and health and safety of the workplace including any Law or regulation applicable thereto, including, without limitation, the COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT of 1980, as amended, (42 U.S.C. Section 9601 et. Seq.), the RESOURCE CONSERVATION AND RECOVERY ACT of 1976, (42 U.S.C. Section 6901 et. seq.), the CLEAN WATER ACT, (33 U.S.C. Section 446 et. seq.), the SAFE DRINKING WATER ACT, (U.S.C. Sections 1401-1450), and the HAZARDOUS MATERIALS TRANSPORTATION ACT, (49 U.S.C. Section 1801 et. seq.), all of the United States of America, and, in Canada, the WASTE MANAGEMENT ACT, R.S.B.C. 1996, c. 482, ENVIRONMENTAL ASSESSMENT ACT, R.S.B.C. 1996, c. 119, ENVIRONMENTAL PROTECTION AND ENHANCEMENT ACT S.A. 1992, c. E-13.3, SPECIAL WASTE MANAGEMENT CORPORATION ACT, S.A. 1982, c. S-21.5, and CANADIAN ENVIRONMENTAL PROTECTION ACT, R.S.C. 1985, c. 22. "Financial Statements" means the unaudited financial statements of Outback as prepared by management dated as of December 31, 2009. 2 "Governmental Entity" means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state, provincial or local, domestic or foreign. "Income Tax Return" means a Tax Return required to be supplied to a Governmental Entity with respect to Income Taxes, including, where permitted or required, combined or consolidated returns for any group of Persons that includes a Outback. "Income Taxes" means all Taxes based on or measured by net income (including any interest and penalties and addition to tax (civil or criminal) related thereto or to the nonpayment thereof), not including withholding or tollgate taxes. "Intellectual Property" means any patent, patent disclosure, trademark, service mark, trade dress, logo, trade name, copyright or mask work, any registration, or application for any of the foregoing, and any computer software (including source and object codes), computer program, computer data base or related documentation or materials, data, documentation, manual, trade secret, confidential business information (including ideas, formulas, compositions, inventions, know-how, manufacturing and production processes and techniques, research and development information, drawings, designs, plans, proposals and technical data, financial, marketing and business data, and pricing and cost information) or other intellectual property right (in whatever form or medium). "Knowledge" with respect to the Seller means the actual knowledge of each of them and with respect to Purchaser means the actual knowledge of any of the Purchaser's directors, officers and management personnel. "Law" means any constitutional provision, statute, law, rule, regulation, executive order, Permit, decree, injunction, judgment, order, ruling, award, determination, finding or writ of any Governmental Entity. "Material Adverse Circumstance" means (a) with respect to Outback, any fact, circumstance or condition that would reasonably be expected to have a material adverse effect on the Business, or on the operations, assets or financial condition of Outback, in either case taken as a whole, but excluding any fact, circumstance or condition that (i) is generally applicable to the industries in which Outback operates, (ii) is generally applicable to the economy or securities markets, (iii) is set forth in a Schedule hereto, or (iv) results from the transactions contemplated hereby or the identity of Purchaser; and (b) with respect to the Purchaser, any fact, circumstance or condition that would reasonably be expected to have a material adverse effect on the Business, or on the operations, assets or financial condition of the Purchaser, in either case taken as a whole, but excluding any fact, circumstance or condition that (i) is generally applicable to the industries in the Purchaser operates, (ii) is generally applicable to the economy or securities markets, (iii) is set forth in a Schedule hereto, or (iv) results from the transactions contemplated hereby. 3 "Material Contract" means each Contract to which Outback is a party or to which a Constituent Company or any of its properties is subject or by which any thereof is bound or that (a) obligates Outback to pay an amount in excess of $10,000 during the year ending December 31, 2010, (b) relates to the sale of goods and/or the provision of services pursuant to which Outback expects to accrue revenue in excess of $10,000 during the year ending December 31, 2010, (c) provides for an extension of credit, other than extensions of credit to customers on terms consistent with industry practice, (d) limits or restricts the ability of Outback to compete or otherwise to conduct its Business in any material manner or place, (e) provides for a guaranty for borrowed money by Outback or in respect of any Person other than Outback, or (f) creates a general or limited partnership or joint venture. "Order" means any decree, injunction, judgment, order, ruling, assessment or writ. "Permit" means any license, permit, franchise, certificate of authority or Order, or any waiver of the foregoing, issued by any Governmental Entity. "Person" means an individual, a corporation, a general or limited partnership, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a Governmental Entity. "Pre-Closing Period" means, with respect to Outback, any Tax Period ending on or before the Closing Date and the portion of any Straddle Period ending on the Closing Date. "Purchase Price" has the meaning set forth in Section 2.2. "Purchaser" has the meaning set forth in the preamble hereto. "Purchaser Disclosure Documents" means any documents filed by Purchaser with any Governmental Entity pursuant to any Securities Laws. "Purchaser Indemnitees" means each of Purchaser, and its directors, officers, employees, Affiliates, agents and assigns. "Securities Laws" means the U.S. SECURITIES ACT of 1933, as amended, the SECURITIES ACT (British Columbia) and the equivalent Laws in the other states of the United States and in the other provinces of Canada, and the published policies of any Governmental Entity administering those statutes. "Securities Act of 1933" means the U.S. Securities Act of 1933, as amended (15 U.S.C.ss.77a ET SEQ. "Securities Act (British Columbia)" means the British Columbia SECURITIES ACT; RSBC 19 ,c. "Securities Reports" has the meaning ascribed to that term in Section 5.22 hereof. "Seller" has the meaning set forth in the preamble hereto. 4 "Seller Indemnitee" means the Seller and its respective employees, Affiliates, agents, assigns, heirs and personal representatives. "Shares" has the meaning set forth in the preamble hereto.. "Straddle Period" means, with respect to the Constituent Companies, any Tax Period that begins before and ends after the Closing Date. "Tax" means any federal, state, provincial, local or foreign net income, gross income, gross receipts, sales, goods and services, use, ad valorem, transfer, franchise, profits, license, lease, withholding, payroll, employment, pension, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other tax, fee, assessment or charge, including any interest, penalty or addition thereto and including any liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), and any liability in respect of any Tax as a transferee or successor, by Law, contract or otherwise. "Tax Act" means the INCOME TAX ACT (Canada). "Tax Code" means the Internal Revenue Tax Code of 1986 (U.S.A.), as amended. "Tax Period" means, with respect to any Tax, the period for which the Tax is reported as provided under applicable Tax Laws. "Tax Return" means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and any amendment thereto or modification thereof. 2. BASIC TRANSACTION. 2.1 PURCHASE AND SALE OF SHARES. Subject to the terms and conditions of this Agreement, the Seller agrees to sell the Shares beneficially owned by the Seller, and to deliver the certificates evidencing such Shares, and Purchaser agrees to purchase such Shares from the Seller, for the consideration hereinafter set forth. The stock certificates representing the Shares will be properly endorsed for transfer to, or accompanied by a duly executed stock power in favor of, Purchaser and otherwise in a form acceptable for transfer on the books of the Constituent Companies. 2.2 PURCHASE PRICE. The aggregate purchase price for the Shares (the "Purchase Price") shall be an amount equal to the book value of all of the Tangible Assets less all liabilities. As at the date of this Agreement, the Purchase Price is estimated to be $61,365 Canadian dollars payable by cash on closing. The Purchase Price is subject to reduction by an amount not greater than $19,284, depending on the outcome of the April 30, 2010 payment due to Outback under the Cougar Agreement 5 3. CLOSING AND CLOSING DATE. 3.1 CLOSING. Unless this Agreement has been terminated prior to closing (the "Closing") will take place at the offices of the Seller, #208 - 828 Harbourside Drive, North Vancouver, British Columbia V7P 3R9, on the earlier to occur of May 10, 2010 or the second business day after the satisfaction or waiver of all of the Closing conditions set forth in Sections 9.1, 9.2 and 9.3, or at such other place or on such other date as Purchaser and the Seller may agree. 3.2 CLOSING DATE. The date on which the Closing actually takes place is referred to in this Agreement as the "Closing Date." The Closing will be deemed for all purposes under this Agreement to have occurred as of 12:01 a.m., Vancouver time, on the Closing Date. 3.3 DELIVERIES AT THE CLOSING. At the Closing, (a) the Seller will deliver to Purchaser the certificates referred to in Section 9.2(c) and the resignations of certain Directors referred to in Section 9.2(d), (b) Purchaser will deliver to the Seller the certificate referred to in Section 9.3(c), (c) the Seller will deliver to Purchaser the stock certificates representing the Shares, properly endorsed for transfer to or accompanied by duly executed stock powers in favor of Purchaser and otherwise in a form acceptable for transfer on the books of Outback, (d) Purchaser will deliver to the Seller, the cash portion of the Purchase Price by certified check, less any deposit paid. 4. REPRESENTATIONS AND WARRANTIES BY SELLER. The Seller represents and warrants to Purchaser that the statements contained in this Section 4 are correct and complete as of the date of this Agreement and as of the Closing Date, unless such representations and warranties by their terms speak as of an earlier date, in which case they shall be true and correct, or true and correct in all material respects, as the case may be, as of such date. For purposes of this Section 4, any documents or information indicated as having been made available to Purchaser will be deemed to have been so made available if they have been delivered or made available to Purchaser or any of its representatives or agents prior to the date of this Agreement. 4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Outback is a corporation duly organized, validly existing and in good standing under the Laws of the province in which it was incorporated. Outback has all requisite power and authority to own, lease and operate its properties and to carry on its Business as presently being conducted. Outback is duly qualified to conduct business and is in good standing under the Laws of each jurisdiction where such qualification is required, except where the failure to be so qualified is not a Material Adverse Circumstance. 6 4.2 AUTHORIZATION OF TRANSACTION; NO CONFLICTS. The Seller is legally competent and has the authority to execute, deliver and perform his obligations under this Agreement, and this Agreement, when duly executed and delivered by Purchaser, constitutes a legally valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar Laws and equitable principles relating to or limiting creditors' rights generally. The execution, delivery and performance of this Agreement by the Seller will not (i) violate, or constitute a breach or default (whether upon lapse of time and/or the occurrence of any act or event or otherwise) under the charter documents or by-laws of Outback, (ii) result in the imposition of any Encumbrance against any material assets or properties of Outback, or (iii) violate any Law, except for any such violations, breaches, defaults and impositions as would not in the aggregate constitute a Material Adverse Circumstance. The execution, delivery and performance of this Agreement by the Seller will not require any Approvals to be obtained, except for any such Approvals the failure of which to receive would not in the aggregate constitute a Material Adverse Circumstance or have a material adverse effect on the ability of the Seller to consummate the transactions contemplated by this Agreement. 4.3 CAPITALIZATION. Schedule A sets forth for Outback (a) the number of authorized shares of capital stock, (b) the number of issued and outstanding shares of each class of its capital stock, (c) the number of shares of its capital stock held in treasury, and (d) the names of its directors and elected officers. The Seller has made available to Purchaser correct and complete copies of the Certificate of Incorporation and by-laws of Outback, each as amended to date. All of the issued and outstanding shares of capital stock of Outback (i) have been duly authorized and are validly issued, fully paid and non assessable, (ii) were not issued in violation of any preemptive or other rights, and (iii) were issued in compliance with all applicable Securities Laws. The Seller holds of record and owns beneficially all of the outstanding Shares in the amounts set forth in Schedule A, free and clear of any restrictions on transfer (other than restrictions under the Securities Act; and applicable state Securities Laws; and pursuant to the constating documents of Outback), Taxes, Encumbrances, options, warrants, purchase rights, Contracts, commitments, equities, claims or demands or agreements of any kind and has full power and legal right to sell, assign, transfer and deliver the same. Assuming the accuracy of Purchaser's representation and warranty set forth in Section 5.5 of this Agreement, upon delivery to Purchaser of the stock certificates representing the Shares (duly endorsed for transfer or with properly executed stock powers attached thereto), and upon Seller' receipt of the Purchase Price, good and valid title to the Shares will pass to Purchaser, free and clear of all Encumbrances, subscriptions, options, warrants, calls, proxies, rights, commitments, restrictions or agreements of any kind. No dividends or distributions have been declared with respect to Outback's outstanding capital stock, the record or payment date for which is on or after the date of this Agreement. Outback is not in default under or in violation of any provision of their respective Certificates of Incorporation or by-laws. Except as set forth on Schedule A, 7 Outback does not control directly or indirectly or has any direct or indirect equity or other participation in any Person or any right (contingent or otherwise) to acquire the same. 4.4 FINANCIAL STATEMENTS. (a) Statements. The Seller has delivered the Financial Statements to Purchaser. The Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods and present fairly in all material respects the financial position and results of operations of Outback as of their historical dates and for the periods indicated. (b) Certain Changes. Since the Financial Statement Date to the date hereof, there has not been, occurred or arisen any change in or event affecting Outback that constitutes, or reasonably would be expected to constitute, a Material Adverse Circumstance. (c) No Other Material Liabilities. As of the date hereof, Outback has not incurred or agreed to incur any liabilities (including capital expenditures) in excess of $10,000 that would, in accordance with historical practices and procedures. 4.5 ACCOUNTS RECEIVABLE. The accounts receivable associated with the Business reflected in the Financial Statements are bona fide receivables, accounted for in accordance with the Seller's historical practices and procedures, representing amounts due with respect to sales actually made or services actually performed in the ordinary course of the operation of the Business. 4.6 TAX MATTERS. All material Income Tax Returns required to be filed by or on behalf of Outback have been duly filed, such Income Tax Returns are complete and accurate in all material respects, and all Taxes shown to be payable on such Income Tax Returns have been paid in full on a timely basis, other than Taxes being contested in good faith or where the failure to make payment could not reasonably be expected to constitute a Material Adverse Circumstance. 4.7 MATERIAL CONTRACTS. Each Material Contract is valid and in full force and effect according to its terms, and Outback has performed its obligations thereunder in all material respects (to the extent such obligations have accrued), and is not in default or breach under any such Material Contract, except where such failure to be in full force and effect or default or breach would not, individually or in the aggregate, constitute a Material Adverse Circumstance. Consummation of the transactions contemplated by this Agreement will not (and will not give any Person a right to) terminate or modify any material rights of, or accelerate or augment any material obligation of Outback under any Material Contract, except for any of the foregoing that would not constitute a Material Adverse Circumstance. 8 4.8 REAL AND PERSONAL PROPERTY; TITLE TO PROPERTY; LEASES. To the Knowledge of the Seller, Outback has title to or other right to use, free of Encumbrances, (i) all items of real property material to the Business, including fees, leaseholds and all other interests in such real property, and (ii) such other tangible assets and properties that are material to the Business, including, but not limited to, all such assets that it purports to own or have the right to use as reflected in the Financial Statements or that were thereafter acquired, except, in any such case, for (a) liens for Taxes not yet due or matters otherwise described to Purchaser (whether or not such liens or other matters constitute Encumbrances), and (b) assets and properties not material to the Business that were disposed of since the Financial Statement Date in the ordinary course of business. To the Knowledge of the Seller, the tangible properties of Outback that are material to the Business are in a good state of maintenance and repair (except for ordinary wear and tear) and are adequate for such Business. The material leasehold properties held by any of Outback as lessee are held under valid, binding and enforceable leases, subject only to such exceptions as are not, individually or in the aggregate, material to the Business. Since the Financial Statement Date, Outback has not entered into any agreement that would subject any of its real property interests or, to the Knowledge of the Seller, its tangible properties to an Encumbrance not in effect as of the date hereof. The Seller has provided to the Purchaser a list of all real property leases and subleases under which Outback is tenant or subtenant. 4.9 INTELLECTUAL PROPERTY. To the Knowledge of the Seller, Outback has ownership of all Intellectual Property, or License to use, required to operate the Business as it is currently operated and the absence of which would constitute, or be reasonably likely to result in, a Material Adverse Circumstance. To the Knowledge of the Seller, Outback is not required to make any payments to others with respect to Intellectual Property owned or licensed by any Person. The Seller has not received any notice to the effect that the Business conflicts with or allegedly conflicts with or infringes the Intellectual Property of any Person. Each right, title and interest in and to the Intellectual Property owned by Outback or used by them in the Business as of the Closing Date will continue to be valid and in full force and effect after the Closing Date. To the Knowledge of the Seller, since the Financial Statement Date, Outback has not transferred or granted any rights under any licenses or agreements with respect to any Intellectual Property or agreed to take any such action. Outback does not own any patents or patent applications filed with any Governmental Entity. 4.10 LEGAL MATTERS; COMPLIANCE WITH LAWS. (a) As of the date hereof, there is no Order or Action pending or, to the Knowledge of the Seller, threatened in writing, against or affecting the Business or Outback that (i) involves a claim or potential claim of liability in excess of $10,000 against or affecting Outback or any of its tangible properties or assets, (ii) enjoins or seeks to enjoin any activity by Outback if such injunction constitutes, or if entered would constitute, a Material Adverse Circumstance, or (iii) individually or when aggregated with one or more other Orders or Actions has had or would reasonably be expected to have a material 9 adverse effect on the Seller's ability to perform this Agreement. Neither Outback nor the Seller has waived any statute of limitations or other affirmative defense with respect to Outback's obligations. There is no continuing Order, injunction or decree of any court, arbitrator or government, administrative or other competent authority to which Outback is a party or, to the Knowledge of the Seller, to which Outback or any of its assets is subject. (b) To the Knowledge of the Seller, Outback is in compliance in all material respects with all applicable Laws in connection with the operation of the Business, and no Action has been commenced against or threatened against Outback, except for any failures of compliance or Actions alleging such a failure as, in either case, could not reasonably be expected to result in a Material Adverse Circumstance or a material adverse effect on the Seller' ability to perform their obligations under this Agreement. It is the intent of the parties that the representations and warranties set forth in this Section 4.10(b) will not be applicable to Tax matters, or employees and employee benefit matters, which are the subjects of the representations and warranties set forth in Sections 4.6 and 4.11, respectively. 4.12 LABOR RELATIONS. The Seller has no Knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to any employee of the Business. 4.13 PERMITS. To the Seller's Knowledge, all material Permits necessary to conduct the Business as presently conducted have been obtained, except where the failure to obtain such Permit would not reasonably be expected to constitute a Material Adverse Circumstance. To the Seller's Knowledge, no suspension, cancellation or termination of any of such material Permit is pending or threatened. 4.14 AFFILIATE AGREEMENTS, TRANSACTIONS. (a) The Seller has provided the Purchaser with a list of all written contracts and agreements outstanding as of the date of this Agreement, and a brief description in reasonable detail of all oral agreements or arrangements, that relate to (i) the provision of material products or services to the Business by any other division, unit or Affiliate of the Seller, or (ii) the provision of material products or services by the Business to any other division, unit or Affiliate of the Seller. The Seller has made available to Purchaser correct and complete copies of each such written agreement, as amended to date. (b) The consummation of the transactions contemplated by this Agreement will not (either alone, or upon the occurrence of any act or event, or with the lapse of time, or both) result in any payment arising or becoming due from Outback to the Seller or any Affiliate of the Seller. 10 4.15 INSURANCE. All of the material policies of insurance (other than excess coverages) under which the Business or Outback are insured are in full force and effect, are sufficient for compliance with all applicable requirements of Law and all agreements to which Outback is a party or subject, and provide insurance coverage of the assets, operations and employees of the Business generally equivalent in type and amount to that which is customarily carried by other corporations engaged in similar businesses. 4.16 BANK ACCOUNTS AND POWERS. The Seller has provided the Purchaser with a list of each bank, trust company, savings institution, brokerage firm, mutual fund or other financial institution with which Outback has an account or safe deposit box relating to the Business and the names and identification of all Persons authorized to draw thereon or to have access thereto. The Seller has provided the Purchaser with a list which lists the names of each Person holding powers of attorney or agency authority from Outback in connection with the Business and a summary of the material terms thereof. 4.17 OPERATION IN THE ORDINARY COURSE. Since the Financial Statement Date, the Business has been operated in the ordinary course and substantially in accordance with past practice other than changes in general conditions in which the Business operates, in Law or applicable regulations or the official interpretations thereof. 4.18 BROKERS' FEES. The Seller has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which Purchaser or any of its Affiliates (including for this purpose Outback) could become liable or obligated. 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and warrants to the Seller that the statements contained in this Section 5 are correct and complete as of the date of this Agreement. 5.1 ORGANIZATION AND RELATED MATTERS. Purchaser is a corporation duly formed, validly existing and in good standing under the Laws of the Province of British Columbia, Canada. Purchaser has all requisite limited corporate power and authority to own, lease and operate its property and enter into this Agreement. 11 5.2 COMPLIANCE WITH LAWS. To the best of its knowledge, after due inquiry, Purchaser has complied with and at the date hereof is in compliance with all applicable Laws, except where failure to so comply will not constitute a Material Adverse Circumstance, and Purchaser has all licenses, permits, orders or approvals of, and has made all required registrations with every Governmental Entity that is material to the conduct of the Business. Except as disclosed to Seller, Purchaser is not in conflict with, or in default (including cross-defaults) or violation of: (a) its articles of incorporation or by-laws; (b) to the best of its knowledge, after due inquiry, at the date hereof, any Law or permit applicable to it or by which its properties is bound or affected, which conflict, default or violation, in any case, has or may have a Material Adverse Effect on it or may impede the completion of any transactions contemplated by this Agreement; (c) any debt agreement to which it is a party or by which it or any of its properties is bound or affected which conflict, default or violation, in any case, could constitute a Material Adverse Circumstance on it or might impede the completion of any of the transactions contemplated in this Agreement; (d) any Material Agreement to which it is a party or by which it or any of its properties is bound or affected which conflict, default or violation, in any case, could have a Material Adverse Effect on it or could impede the completion of any of the transactions contemplated in this Agreement. In particular, and without limiting the generality of the foregoing, Purchaser has complied with the provisions of Securities Laws in all material respects. 5.3 AUTHORIZATION; NO CONFLICTS. Purchaser has all requisite corporate power and authority to enter into this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and constitutes the valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar Laws and equitable principles relating to or limiting creditors' rights generally. The execution, delivery and performance of this Agreement by Purchaser, will not (i) violate or constitute a breach or default (whether upon lapse of time and or the occurrence of any act or event or otherwise) under the charter documents or by-laws of Purchaser, (ii) result in the imposition of any Encumbrance against any material assets or properties of Purchaser, or (iii) violate any Law, except for any such violations, breaches, defaults and impositions as would not reasonably be expected to have a material adverse effect on the business operations, assets or financial condition of Purchaser. The execution, delivery and performance of this Agreement by Purchaser will not require any Approvals to be obtained except for any such Approvals the failure of which to receive would not in the aggregate have a material adverse effect on the ability of Purchaser to consummate the transactions contemplated by this Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Purchaser in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. 12 5.4 LITIGATION. There are no judgments, actions, suits or proceedings (whether or not purportedly on behalf of the Purchaser), pending and served on or by the Purchaser or threatened against or affecting the Purchaser, at law or in equity, or before or by any Governmental Entity, which action, suit or proceeding involves the possibility of any judgment against or liability of the Purchaser; the Purchaser is not now aware of any existing ground on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success. In particular, there are no judicial or administrative actions, proceedings or investigations pending or, to Purchaser's Knowledge, threatened that question the validity of this Agreement or any action taken or to be taken by Purchaser in connection with this Agreement or that, if adversely determined, would have a material adverse effect upon Purchaser's ability to enter into or perform its obligations under this Agreement. There is no Claim pending or, to the knowledge of the Purchaser, after due inquiry, threatened in writing against or involving Purchaser or any of Purchaser's assets or properties before any court, arbitrator or Governmental Entity, which could result in a Material Adverse Circumstance. At the date hereof, neither Purchaser nor any of its properties is subject to any judgment, order, decree or lien. 5.5 SOLVENCY. Purchaser is not insolvent, has not committed an act of insolvency or bankruptcy, proposed a compromise or arrangement to its creditors generally, had any petition for a receiving order in bankruptcy filed against it, taken any proceeding with respect to a compromise or arrangement, taken any proceedings to have itself declared bankrupt or wound-up, taken any proceedings to have a receiver appointed over any part of its assets, had any encumbrancer take possession of any of its property or had any execution or distress become enforceable or become levied upon any of its property or any seizure against any of its property. 6. PRE-CLOSING COVENANTS. The parties agree as follows with respect to the period between the date of this Agreement and the Closing Date: 6.1 REASONABLE ACCESS. (a) The Seller shall afford Purchaser reasonable access during normal business hours (or during such other times as are agreed to by the Seller and Purchaser) to books and records related to the Business so that Purchaser and its advisors may have the opportunity to make such reasonable investigations as they shall desire to make of the Business. The Seller shall furnish to Purchaser any additional financial and operating data and other information as Purchaser shall from time to time reasonably request with respect to the same. Purchaser shall, upon reasonable request, provide Seller with such information concerning Purchaser as may be reasonably necessary for the Seller to verify Purchaser's performance of and compliance with its representations, warranties, and covenants herein contained. 13 (b) Purchaser shall afford the Seller reasonable access during normal business hours (or during such other times as are agreed to by the Seller and Purchaser) to books and records related to the Purchaser's business so that the Seller and their advisors may have the opportunity to make such reasonable investigations as they shall desire to make of the Purchaser. Purchaser shall furnish to the Seller any additional financial and operating data and other information as the Seller shall from time to time reasonably request with respect to the same. The Seller shall, upon reasonable request, provide Purchaser with such information concerning the Constituent Companies as may be reasonably necessary for Purchaser to verify the Seller' performance of and compliance with their representations, warranties, and covenants herein contained. 6.2 CONDUCT BEFORE CLOSING DATE. Before the Closing Date, except as otherwise contemplated by this Agreement or as permitted by the prior written consent of Purchaser, but without making any commitment on Purchaser's behalf, the Seller shall (i) conduct the Business only in the ordinary course consistent with past practice; (ii) cause the Constituent Companies to perform in all material respects their respective obligations under all binding agreements and maintain all leases and licenses in good standing in full force and effect to the same extent that such leases and licenses were maintained immediately prior to the date of this Agreement; (iii) continue in effect insurance policies (or similar coverage) referred to in Section 4.15 hereof; (iv) use commercially reasonable efforts to keep available the services of current employees of the Business; and (v) use commercially reasonable efforts to maintain and preserve the good will of the suppliers, customers, employees and others having business relations with the Constituent Companies. 6.3 PROHIBITED TRANSACTIONS BEFORE CLOSING DATE. Before the Closing Date, except as otherwise contemplated by this Agreement or permitted by the prior written consent of Purchaser, the Seller shall not and shall not cause the Constituent Companies to directly or indirectly, in any way, contact, initiate, enter into, or conduct any discussions or negotiations, or enter into any agreements, whether written or oral, with any Person or entity, with respect to the sale of any of the Constituent Companies. 6.4 FURTHER ASSURANCES. Before and after the Closing, each party hereto shall execute and deliver such instruments and take such other actions as any other party may reasonably request for the purpose of carrying out the intent of this Agreement and the other acquisition documents. Each party hereto shall use its best efforts to cause the transactions contemplated by this Agreement and the other acquisition documents to be consummated, and, without limiting the generality of the foregoing, to provide to or obtain all consents and authorizations of Governmental Entities and third parties; and to make all filings with and give all notices to Governmental Entities and third parties that may be necessary or 14 reasonably required to effect the transactions contemplated by this Agreement and the other acquisition documents. 6.5 CONFIDENTIALITY. Before and after the Closing, each party to this Agreement shall, and shall cause its officers, accountants, counsel, and other authorized representatives and affiliated parties, to hold in strict confidence and not use or disclose to any other party without the prior written consent of the other party, all information obtained from the other parties in connection with the transactions contemplated hereby, except such information may be used or disclosed when required by any regulatory authorities or Governmental Entities, if required by court order or decree or applicable law, if it is publicly available other than as a result of a breach of this Agreement, if it is otherwise contemplated herein, or by Purchaser from and after the Closing to the extent related to the Business. 6.6 SUPPLEMENTAL DISCLOSURES. Before the Closing, if any party discovers facts or circumstances that should be disclosed on one or more of such party's Disclosure Schedules, such party shall so notify the other parties to this Agreement. 7. POST-CLOSING COVENANTS. The parties agree as follows with respect to the period on and after the Closing Date: 7.1 GENERAL. In case at any time on or after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, each of the parties will take such further action (including the execution and delivery of such further instruments and documents) as the other party may reasonably request, at the sole cost and expense of the requesting party (unless the requesting party is entitled to indemnification therefor). 7.2 POST-CLOSING CONSENTS. The Seller wil1 use, and shall cause Outback to use, commercially reasonable efforts, and Purchaser will use commercially reasonable efforts on and after the Closing Date to obtain all third party consents, if any, that are not obtained prior to the Closing Date and that are required in connection with the transactions contemplated by this Agreement. 7.3 AGREEMENTS REGARDING TAX MATTERS. (a) Returns. The Seller (on behalf of Outback) shall timely and accurately file or cause to be filed (i) all Tax Returns required to be filed by Outback on or prior to the Closing Date, and (ii) all Income Tax Returns which include the taxable income of Outback (to the extent required by Law). Purchaser shall be responsible for the timely preparation and filing of all Tax Returns of Outback other than those 15 Tax Returns that are the responsibility of the Seller pursuant to the preceding sentence. (b) Assistance and Cooperation. After the Closing Date, each of the Seller and Purchaser shall: (i) assist and cause its respective Affiliates and representatives to assist the other party in preparing any Tax Returns and statements which such other party is responsible for preparing and filing; (ii) cooperate fully in preparing for any Tax audits of, or disputes, contests or proceedings with, taxing authorities regarding any Taxes; (iii)make available to the other and to any taxing authority, as reasonably requested, all information, records and documents relating to Tax liabilities that are attributable to Outback and relate to or affect periods beginning prior to the Closing Date; (iv) preserve all such information, records and documents until the expiration of any applicable statues of limitations or extensions thereof and as otherwise required by Law; (v) make available to the other, as reasonably requested, personnel responsible for preparing or maintaining information, records and documents in connection with Tax matters; (vi) furnish the other with copies of all correspondence received from any taxing authority in connection with any Tax audit or information request with respect to any such period; (vii)keep confidential any information obtained pursuant to this Section 7.3(g), except as may otherwise be necessary in connection with the filing of returns or claims for refund or in conducting any audit or other Tax proceeding; and (viii) furnish the other with adequate information which would enable the other party to determine its entitlement to, and the amount of, any refund or credit to which either party reasonably believes the other party may be entitled. 8. ADDITIONAL COVENANTS OF THE PURCHASER. Purchaser acknowledges and agrees to the following: (a) Included as part of the obligations assumed by Purchaser in this transaction, Purchaser shall be responsible for any and all outstanding amounts due and other obligations of Outback; 16 (b) It will hold the Seller harmless from any and all outstanding liabilities of Outback; (c) It will give a complete and unconditional Release of the Seller from any employee liabilities, severance and contingent issues related to the operations as at the date of closing. 9. GENERAL OBLIGATIONS. The obligations of Purchaser and the Seller to effect the Closing shall be subject to each of the following conditions, unless waived in writing by each of the parties: (a) Approvals. On or prior to the Closing Date, all Approvals required by applicable Law to be obtained from any Governmental Entity to effect the issuance and delivery of the Shares shall have been received or obtained. 9.1 CONDITIONS TO OBLIGATION OF PURCHASER. The obligation of Purchaser to effect the Closing shall be subject to satisfaction of each of the following conditions, except to the extent waived in writing by Purchaser: (a) Representations and Warranties. (i) The representations and warranties of the Seller set forth in Section 4 that are qualified as to materiality shall be true and correct and the representations and warranties of the Seller set forth in Section 4 that are not so qualified shall be true and correct in all material respects, in each case on the date of this Agreement and on the Closing Date as though made on the Closing Date, unless such representations and warranties by their terms speak as of an earlier date, in which case they shall be true and correct, or true and correct in all material respects, as the case may be, as of such date, except to the extent that the failure of such representations and warranties to be true and correct, or true and correct in all material respects, as the case may be, would not constitute a Material Adverse Circumstance. (ii) From the date of this Agreement until the Closing Date, there has not been, occurred, or arisen, any change in or event affecting Outback that constitutes a Material Adverse Circumstance. (b) Covenants of Seller. The Seller will have performed and complied in all material respects with all of their covenants contained in this Agreement required to be performed or complied with on or prior to the Closing Date. (c) Resignations: The Seller will have delivered to the purchaser Resignations of all Directors of Outback dated effective at the Closing Date. 17 9.2 CONDITIONS TO OBLIGATION OF SELLER. The obligation of the Seller to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of each of the following conditions: (a) Representations and Warranties. The representations and warranties of Purchaser set forth in Section 5 that are qualified as to materiality shall be true and correct and the representations and warranties of Purchaser set forth in Section 5 that are not so qualified shall be true and correct in all material respects, in each case, on the date of this Agreement and on the Closing Date as though made on the Closing Date, unless such representations and warranties by their terms speak as of an earlier date, in which case they shall be true and correct, or true and correct in all material respects, as the case may be, as of such date, except to the extent that the failure of such representations and warranties to be true and correct, or true and correct in all material respects, as the case may be, would not have a material adverse effect on Purchaser's ability to perform its obligations under this Agreement. (b) Covenants of Purchaser. Purchaser will have performed and complied in all material respects with all of its covenants contained in this Agreement required to be performed or complied with on or prior to the Closing Date. 10. GENERAL 10.1 SEVERABILITY Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable Law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 10.2 COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement. 10.3 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 10.4 NOTICES. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally to the recipient or when 18 sent to the recipient by telecopy (receipt confirmed), one business day after the date when sent to the recipient by reputable express courier service (charges prepaid) or three (3) business days after the date when mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands and other communications will be sent to Purchaser and the Seller at the addresses indicated below: If to Seller Widescope Resources Inc. #208 - 828 Harbourside Dr. North Vancouver, BC V7P 3R9 Telephone: (604) 904-8481 Telecopy: (604) 904-9431 If to Purchaser: Madjak Management Ltd. P.O. Box 10322, Pacific Centre Suite 1588 - 609 Granville Street Vancouver BC V7Y 1G5 Telephone: (604) 678-8941 Telecopy: (604) 689-7442 Attn: President or to such other address or to the attention of such other party as the recipient party has specified by prior written notice to the sending party. 10.5 NO THIRD-PARTY BENEFICIARIES. This Agreement will not confer any rights or remedies upon any Person other than the Seller and Purchaser and their respective successors and permitted assigns. 10.6 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the parties and supersedes any prior understandings, agreements or representations by or among the parties, written or oral, that may have related in any way to the subject matter hereof, including without limitation, the Letter of Intent. 10.7 CONSTRUCTION. All terms defined herein have the meanings assigned to them herein for all purposes, and such meanings are equally applicable to both the singular and plural forms of the terms defined. "Include", "includes" and "inc1uding" shall be deemed to be followed by "without limitation" whether or not they are in fact followed by such words or words of like import. "Writing", "written" and comparable terms refer to printing, typing, lithography and other means of reproducing words in a visible form. Any instrument or Law defined or referred to herein means such instrument or Law as from time to time amended, modified or 19 supplemented, including (in the case of instruments) by waiver or consent and (in the case of any Law) by succession of comparable successor Laws and includes (in the case of instruments) references to all attachments thereto and instruments incorporated therein; but in all cases only as amended, modified or supplemented through the date of this Agreement. References to a Person are, unless the context otherwise requires, also to its successors and assigns. Any term defined herein by reference to any instrument or Law has such meaning whether or not such instrument or Law is in effect. "Shall" and "will" have equal force and effect "Hereof", "herein", "hereunder" and comparable terms refer to the entire instrument in which such terms are used and not to any particular article, section or other subdivision thereof or attachment thereto. References to "the date of this Agreement," "the date hereof" or words of like import shall mean the date first above written. References in an instrument to "Article", "Section" or another subdivision or to an attachment are, unless the context otherwise requires, to an article, section or subdivision of or an attachment to such instrument. References to any gender include, unless the context otherwise requires, references to all genders, and references to the singular include, unless the context otherwise requires, references to the plural and vice versa. All accounting terms not otherwise defined herein have the meaning assigned under generally accepted accounting principles in Canada which have effective dates on or prior to the Financial Statement Date. 10.8 ASSIGNMENT The Purchaser shall be free to assign its interest in this Agreement. The Seller's interest in this Agreement is not assignable, in whole or in part, provided that the Seller shall be entitled to assign this Agreement to an Affiliate, upon notice in writing to the Purchaser, and provided that the Affiliate agrees to be bound by the terms of this Agreement. 10.8 CURRENCY All references in this Agreement to dollar amounts shall be Canadian. dollars unless specified otherwise. 10.9 REPRESENTATION BY COUNSEL; INTERPRETATION. The Seller and Purchaser each acknowledge that each party to this Agreement has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of Law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intent of Purchaser and Seller. 10.10 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. 20 10.11 GOVERNING LAW. All questions concerning the construction, validity and interpretation of this Agreement and the exhibits and schedules hereto will be governed by the internal laws of British Columbia, Canada other than the conflict of laws rules thereof. 10.12 RESOLUTION OF DISPUTES. All litigation relating to or arising under or in connection with this Agreement shall be brought only in the federal or local courts located in the Vancouver, British Columbia, which shall have exclusive jurisdiction to resolve any disputes with respect to this Agreement, with each party irrevocably consenting to the jurisdiction thereof for any Actions, suits or proceedings arising out of or relating to this Agreement. The parties hereto irrevocably waive trial by jury in any legal action or proceeding relating to this Agreement or any other agreement entered into in connection herewith and for any counterclaim with respect hereto. In the event of any breach of the provisions of this Agreement, the non-breaching party shall be entitled to equitable relief, including in the form of injunctions and orders for specific performance, where the applicable legal standards for such relief in such courts are met, in addition to all other remedies available to the non-breaching party with respect hereto at law or in equity. In addition, the prevailing party or parties shall be entitled to reasonable attorneys' fees, costs and expenses incurred in connection with any legal action or proceeding. 10.13 NO CONSEQUENTIAL DAMAGES. Notwithstanding anything to the contrary elsewhere in this Agreement, no party (or its Affiliates) shall, in any event, be liable to the other parties (or its Affiliates) for any consequential, special or punitive damages, including, but not limited to, loss of future revenue or income, or loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement on the date first written above. PURCHASER: SELLER: MADJAK MANAGEMENT LTD. WIDESCOPE RESOURCES INC By: By: --------------------------------- --------------------------------- Authorized Signatory Authorized Signatory 21 EX-12.1 8 ex12-1.txt CEO SECTION 302 CERTIFICATION EXHIBIT 12.1 RULE 13A-14(A) CERTIFICATION IN ACCORDANCE WITH SECTION 302 OF THE SARBANES OXLEY ACT OF 2002 I, Richard J. Mark, Chief Executive Officer of North American Nickel Inc. (formerly Widescope Resources Inc.) (the "Company"), certify that: 1. I have reviewed this annual report on Form 20-F of the Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Date: April 27, 2010 /s/ Richard J. Mark - ----------------------------------- Richard J. Mark Chief Executive Officer EX-12.2 9 ex12-2.txt CFO SECTION 302 CERTIFICATION EXHIBIT 12.2 RULE 13A-14(A) CERTIFICATION IN ACCORDANCE WITH SECTION 302 OF THE SARBANES OXLEY ACT OF 2002 I, Edward D. Ford, Chief Financial Officer of North American Nickel Inc. (formerly Widescope Resources Inc.) (the "Company"), certify that: 1. I have reviewed this annual report on Form 20-F of the Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Date: April 27, 2010 /s/ Edward D. Ford - -------------------------------------------- Edward D. Ford Chief Financial Officer EX-13.1 10 ex13-1.txt CEO SECTION 906 CERTIFICATION EXHIBIT 13.1 SECTION 1350 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002* In connection with the annual report of North American Nickel Inc. (formerly Widescope Resources Inc.) (the "Company") on Form 20-F for the period ending December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard J. Mark, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report containing the financial statements of the Company fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 27, 2010 /s/ Richard J. Mark - ----------------------------------- Richard J. Mark Chief Executive Officer * A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EX-13.2 11 ex13-2.txt CFO SECTION 906 CERTIFICATION EXHIBIT 13.2 SECTION 1350 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002* In connection with the annual report of North American Nickel Inc. (formerly Widescope Resources Inc.) (the "Company") on Form 20-F for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward D. Ford, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report containing the financial statements of the Company fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 27, 2010 /s/ Edward D. Ford - -------------------------------------------- Edward D. Ford Chief Financial Officer * A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----