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Jacob Willoughby | VP, Equity Research Analyst

[email protected]

Canada Nickel Company Inc. (TSXV: CNC) Huge Nickel Potential in Timmins

Initiating Coverage June 15, 2020

We are launching coverage on Canada Nickel Company (CNC) with a BUY rating and C$1.99 target price. CNC is advancing its 100%-owned large-scale Crawford Nickel Sulphide Project ~35km north of Timmins Ontario. With a recent maiden resource of 3.3B lb. of Ni (M&I), the Crawford Project already ranks as one of the largest Nickel Sulphide projects in the world with only ~30% of the prospective structure tested to date. With funding to complete a PEA on the project, CNC is positioned as an attractive takeout candidate as it continues to grow the size and quality of the project with drilling. Investment Thesis: Building a bigger, better Dumont. The same team which advanced

the Dumont Nickel project through to feasibility stage is now looking to apply the same strategy at Crawford, a project which to date has demonstrated higher grade and likely superior economics than Dumont. It also benefits from extensive existing infrastructure from the adjacent mining hub in Timmins.

Drilling for quality and quantity. The 2020 resource includes a Higher-Grade Zone of 263Mt at 0.31%Ni, 0.013% Co and 0.038 g/t Pd + Pt (MI) areas which could be mined as a starter pit(s) making for favorable project economics. Additionally, the company announced a new discovery named the East Zone in May where it intersected its highest-grade interval to date: 0.42% Ni & 0.2 g/t Pd+Pt over 55m (CR19-28) demonstrating potential for other higher grade zones certainly exist.

Initial favorable metallurgical testing suggests nickel is highly recoverable. Metallurgical recoveries could potentially make or break the future of this substantial and growing nickel sulphide resource. Initial test work suggests 89% of the contained nickel in the Higher-Grade Zone is found in sulphide minerals or the Ni-Fe alloy awaruite, which should lead to strong recoveries and the production of a very high-grade Ni concentrate.

Valuation: We are initiating coverage with a BUY rating and C$1.99 price target. Our company NAV is C$3.97 and our target is based on 0.5x that. We have created a DCF model using numerous assumptions from the Dumont Feasibility Study as well as several or our estimates. To account for the risks associated with these estimates, we have elected to use an after-tax, 12% discount rate. A PEA is expected before year end which should provide much more detail about the project and we will adjust our valuation as new information becomes available. We note that Canada Nickel is trading at an EV/lb. of Ni Eq of only $0.01, whereas its peer group average is trading at $0.16 by comparison. Upcoming catalysts include: 1) Drill results from Crawford (Ongoing), 2) Revised Crawford resource estimate (H2), 3) Metallurgical study report (H2), 4) Crawford PEA (Q4).

(Currency is US$ unless noted otherwise)

Closing Price (C$/sh) $1.05Rating BUYTarget (C$/sh) $1.99Return to Target 90%NAV (C$/sh) $3.97P/NAV52 Week Low / High $0.38 / $1.41CAPITALIZATION Basic Diluted Shares Outstanding (M) 67.1 76.5 Market Capitalization (C$M) $70.5Enterprise Value (C$M) $66.1Cash (C$M) $4.4Debt (C$M) $0.0

STOCK CHART

NET ASSET VALUE (C$M) (C$/sh)Crawford Nickel Project $843.4 $2.70Crawford Annex Project $5.0 $0.02Corporate Adjustments $393.2 $1.26NAV $1,241.6 $3.97

RELATIVE VALUATION EV/lb NiEq P/NAVPeer Group Average* $0.16 0.55xCanada Nickel Company Inc. $0.01 0.26x*Capital IQ ConsensusMAJOR SHAREHOLDERS

DISCLOSURE CODE: 3,4(Please refer to the disclosures listed on the back page)Source: RCS, Company Information, Capital IQ

Company Description

0.26x

Management (6.15%), Spruce Ridge Resources Lt. (14.89%)

Canada Nickel Company Inc. acquires, explores, develops,and produces nickel assets. The company engages inexploration and mining of nickel, cobalt, and relatedminerals. The company was founded in 2019 and is basedin Toronto, Canada.

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June 15, 2020 1 Huge Nickel Potential in Timmins


FINANCIAL DATA STOCK CHART

Ticker TSXV:CNC

Current Price (C$/sh) $1.05

52 Week Low / High (C$/sh) $0.38 / $1.41

Rating BUY

Target (C$/sh) $1.99

Return to Target 90%

Shares Outstanding (M) 67.1

Market Capitalization (C$M) $70.5

Cash (C$M) $4.4

Debt (C$M) $0.0

Enterprise Value (C$M) $66.1

FINANCIAL DATA

Capital Structure Shares

(M)Shares Outstanding 67.1

Options 6.5 TECHNICAL ASSUMPTIONS

Warrants 2.9 2021E 2022E 2023E 2024E 2025E 2026E

Fully Diluted Shares 76.5 Nickel Price US$/lb 7.00$ 7.00$ 7.00$ 7.00$ 7.00$ 7.00$

Cobalt Price US$/lb 20.00$ 20.00$ 20.00$ 20.00$ 20.00$ 20.00$

Ownership Shares O/S (M) % O/S PGM Price US$/oz 1,300$ 1,300$ 1,300$ 1,300$ 1,300$ 1,300$

Spruce Ridge Resources Ltd. 10.0 14.9%

Selby, Mark 2.5 3.7% FX Rate ($C:$US) 0.71 0.71 0.71 0.71 0.71 0.71

Leddy, John 0.7 1.0%

Smith, David 0.5 0.8% MINE MODEL

Cox, Mike 0.2 0.3% Input

Balch, Stephen James 0.1 0.2% Start Up Year

Starr, Russell 0.1 0.1% Life of Mine

NAV SENSITIVITY Steady State Production

Mineable Resource Estimate

Grades

Nickel

Cobalt

PGMs

Recoveries

Nickel

Cobalt

PGMs

Operating & Capital Costs

Avg. Total Site Costs LOM

Avg. Cash Costs (Net of by-products) LOM

Avg. Cash Costs (Net of by-products) Years 1-10

Avg. NSR/t ore LOM

Initial Capital Requirements

OPERATIONAL FORECAST RCS Estimates

NET ASSET VALUE

Discount Rate (C$M) (C$/sh)

Crawford Nicel Project, Ontario (100%) 15% 843.4$ 2.70$

Crawford Annex Project, Ontario (80%*) Est. 5.0$ 0.02$

Corporate Adjustments 15% 393.2$ 1.26$

NAV 1,241.6$ 3.97$

*Under option for up to 80% interest

COMPARABLES

(C$) (C$M) (C$M) (US$/lb) P/NAV

PriceMrkt

CapEV

EV/lb

NiEqConsensus

Grid Metals Corp. TSXV:GRDM $0.20 $11.50 $9.61 $0.02

Giga Metals Corporation TSXV:GIGA $0.20 $11.95 $11.72 $0.00

FPX Nickel Corp. TSXV:FPX $0.16 $26.37 $31.93 $0.004

Garibaldi Resources Corp. TSXV:GGI $0.71 $83.74 $77.68 $0.83

Horizonte Minerals Plc AIM:HZM $0.06 $82.01 $91.92 $0.01

Noront Resources Ltd. TSXV:NOT $0.17 $16.50 $75.06 $0.02

CaNickel Mining Limited TSXV:CML $0.06 $2.25 $88.92 $0.17

Mincor Resources NL ASX:MCR $0.65 $224.80 $173.94 $0.21 0.73x

Talon Metals Corp. TSX:TLO $0.15 $83.51 $80.56 $0.23 0.37x

Average $60.29 $71.26 $0.16 0.55x

Priced as of market close on June 12, 2020 Canada Nickel Company Inc. TSXV:CNC $1.05 $70.50 $66.10 $0.01 0.26x

Source: RCS Estimates, Company Reports, Capital IQ, S&P Global Market Intelligence

Company Ticker

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Financial and Operating Summary: Canada Nickel Company Inc.

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Table of Contents

Executive Summary 2

Upcoming Catalysts 2

Investment Thesis 2

Valuation 10

Relative Valuation 10

RCS Crawford Nickel Model 11

Asset Overview 14

The Crawford Ni-Co PGM Project 14

Risks 19

Appendix A: Management and Directors 20

Executive Summary With significant size potential, excellent infrastructure, and an underpinning resource of 3.3B lb. contained Ni (MI & I), our view is that Canada Nickel is favorably positioned as a potential takeout candidate when the global Ni market heats up. At only 67M basic shares outstanding, the newly formed company is several strides ahead of peers offering an inexpensive call option on a significant discovery. The company is moving quickly with funding to complete a PEA this year based on the current 2020 resource which covers only ~30% of the larger 7.9km long target at Crawford.

Upcoming Catalysts: 1. Results from Drilling (Ongoing) 2. Revised Crawford Resource Estimate (H2) 3. Metallurgical study results (H2) 4. Crawford PEA (Q4)

Investment Thesis Using the Dumont recipe to accelerate discovery and development. Canada Nickel was formed in 2019 due to a significant discovery by Noble Mineral Exploration in Crawford Township just north of Timmins Ontario. The same team which developed and brought the Dumont Nickel project through to a feasibility study is now looking to apply the same model at Crawford, which arguably has more scale potential than the massive 1.665Bt Ni-Co-PGE deposit (M&I). Much like Dumont, located 220km to the east, the Crawford Ni-Co-PGE project is an intrusive ultramafic-to-mafic sill (the Crawford Ultramafic Complex), which has undergone a distinct form of alteration called serpentinization. In the Timmins Mining Camp and throughout the wider Abitibi Greenstone Belt, nickel sulphide ores are often characterized by this form of alteration, which renders them highly detectable using geophysical surveying (gravity & magnetic susceptibility). This is due to the serpentine alteration that leads to substantial amounts of magnetite (Fe3O4) being formed. Recent metallurgical testing on drill core from Crawford, found that significant quantities of magnetite were assayed in both the Higher-Grade Zone and Lower-Grade Zones of the current resource at 8.7% and 6.9% respectively. More importantly, serpentinization is distinctly correlated to mineralization as nickel is liberated from silicate minerals to form awaruite, an iron-nickel alloy, in addition to nickel sulphides such as pentlandite, pyrrhotite and heazlewoodite. The net result of this alteration is an upgraded Ni sulphide deposit with a geophysical signature that drastically stands out from its surrounding host rock. The multiple structures at Crawford, many of which have not been drilled yet, total approximately 7.9km of strike length versus only 6km at Dumont. By comparison, the Dumont deposit has resources of 9.75B lb. of Ni (M&I), but has had 440 drill holes totalling 161,703m of drilling on it – more than ten times as much as at Crawford. The Crawford anomaly is entirely buried beneath tens of meters of glacial till and overburden. With no outcropping areas, drilling is the only effective way of testing the anomaly below surface and as a result, only a fraction of the large anomaly has been drill tested to date (~25-30%).

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Figure 1: Mag Surveys Illustrating Deposit Footprint Comparison for Dumont and Crawford Disseminated Ni Deposits

Source: Company Reports

Already a monster resource with plenty of upside. Drilling completed in 2019 and 2020 was successful in outlining a significant resource however, only a fraction of the significant geophysical footprint at Crawford has been drill tested (Figure 2). CNC plans to move ahead into a PEA on the project’s large and growing maiden resource which was tabled in March 2020. The 3.3B lb. Crawford Ni deposit (M&I) is currently the 12th largest known nickel sulphide resource globally and is based off only 27 surface drill holes (13,042m). By comparison, the most recent resource estimate at Dumont used 440 drill holes totalling 161,703m. The resource is segregated in to inner and outer domains called the Higher Grade (0.25% Ni Cut Off) and Low Grade (0.15% Ni Cut-off) Zones. The current deposit has been defined over a strike length of 1.74km, 225-425m wide and ~650m deep and remains open along strike to the northwest, both north and south, and at depth. Notably, hole CR19-14A intersected 901m of mineralization with 0.31% nickel and extended mineralization to a depth of 850m where a large magnetic inversion anomaly has only been partially tested. Drilling is set to continue the property throughout the 2020 season, and we expect results will likely further extend mineralization and demonstrate continuity.

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Figure 2: Plan Map Showing March 2020 Maiden Resource Estimate Ni Grade Shells


Below in Figure 3, is the maiden resource estimate for the company’s 100%-owned Crawford sulphide Ni deposit. What truly sets it apart from the Dumont deposit is the Higher-Grade zone currently at over 260M t grading 0.31% Ni versus 1,028M t at 0.27% Ni at Dumont (in reserves). We believe Crawford could operate at as high as 0.38% Ni for its first few years of operation as recent drilling has intersected even higher-grade zones that will be followed up with more drilling. Figure 3: Crawford Property Mineral Resource Estimate (2020)


Domain ClassTonnes

(Mt)Ni (%) Co (%) Fe (%) S (%)

Contained

Nickel (kt)

Contained

Cobalt (kt)

Contained

Iron (Mt)Measured 59.5 0.31 0.013 6.37 0.18 185.4 7.7 3.8

Indicated 203.4 0.31 0.013 6.32 0.15 621.6 25.9 12.9

Mea+Ind 262.8 0.31 0.013 6.33 0.157 807.0 33.7 16.6

Inferred 66.4 0.29 0.013 6.46 0.13 190.7 8.4 4.3

Measured 145.4 0.21 0.013 6.91 0.04 310.4 19.1 10.0

Indicated 192.2 0.21 0.013 6.86 0.04 407.2 24.9 13.2

Mea+Ind 337.5 0.21 0.013 6.88 0.04 717.6 44.0 23.2

Inferred 244.1 0.21 0.013 6.75 0.04 516.0 31.0 16.5

Domain ClassTonnes

(Mt)Ni (%) Co (%) Fe (%) S (%)

Contained

Nickel (kt)

Contained

Cobalt (kt)

Contained

Iron (Mt)Mea+Ind 600.4 0.25 0.013 6.64 0.09 1,524.5 77.6 39.9

Inferred 310.5 0.23 0.013 6.69 0.06 706.7 39.4 20.8

Domain ClassTonnes

(Mt)Pd (g/t) Pt (g/t)

Contained

Palladium

(koz)

Contained

Platinum

(koz)

Measured 59.5 0.026 0.010 49 20

Indicated 203.4 0.028 0.011 181 74

Mea+Ind 262.8 0.027 0.011 230 93

Inferred 66.4 0.029 0.014 62 29

HIGHER GRADE ZONE

LOWER GRADE ZONE

TOTAL:

HIGHER GRADE ZONE

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Note that from the inset map in Figure 4, only ~30% of the Crawford Ultramafic Complex has been drilled at this point. A revised resource estimate based on this year’s drilling is expected around Q3. Figure 4: Plan Maps Showing Mag Survey Results, Location of Drilling and Current Resource Areas


Recent drilling shows higher grades and a PGM-rich layer Drill results released in late May returned extensions of the higher-grade zone at Crawford in addition to multiple new PGM zones significantly improving both the size and quality of the deposit. CNC announced its highest Ni intersection to date at 0.42% Ni, 0.2 g/t Pd+Pt over 55m (CR19-28) in the East Zone. This newly discovered zone, a fault offset continuation of the Main Zone, currently extends the total strike at Crawford from 1.7km to 3.4km and demonstrates the significant growth potential still present within the project area. Drilling in this zone currently extends to a depth of 573m where mineralization remains unconstrained. Assays are pending for an additional 9 holes from the East Zone. Drilling 1.5km north along strike from the Main Zone intersected multiple mineralized zones with highlights of 1.3 g/t Pd + 1.3 g/t Pt over 7.5m from a depth of 123m (CR20-23), Figure 5 below. These results support our view that economic PGM minerals could be present in the deposit which offer the potential for a secondary small PGM operation.

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Figure 5: Plan View of PGM Zone - Drilling Overlain on Total Field Magnetic Intensity


Metallurgy – Crucial for All Base Metal Deposits, but Even More So for Sulphide Ni Deposits. Fortunately, recent metallurgical testing demonstrated that most of the Ni at Crawford is found in sulphide minerals and is thus easily recoverable by standard floatation. Metallurgical testing on drill core from the Higher Grade and Lower Grade Zones at Crawford also found high proportions of three low-sulphur minerals contained in the current resource. Mineralogical tests concluded that proportions of nickel in sulphide and nickel-iron alloy minerals in the Higher Grade and Lower Grade Zones were 89% and 59% respectively (Figure 6). As such, Crawford should be favorably positioned to sell its product as a high-grade concentrate, but much more work needs to be done in this regard. Note that only sulphide Ni or Ni from awaruite can be recovered in standard floatation to a concentrate. Ni in silicates is not recoverable to a floatation concentrate.

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Figure 6: 2020 Metallurgical Test Highlights


Important Comparisons with Dumont Metallurgy Testing completed by RNC Minerals (TSX:RNX, BUY, C$1.30 target, Derek Macpherson) on Crawford’s analogue, Dumont, yielded concentrates of over 29% Ni and 1% Co; the highest grade sulphide Ni concentrate ever produced. This is partly related to the low sulphur-content of the minerals found in the Dumont deposit such as awaruite (sulphur-free) and heazlewoodite (a very low sulphur nickel ore mineral). However, overall LOM Ni recoveries were estimated at only 43% in the feasibility study (lower than any other we have ever seen). Recoveries to sulphide concentrates are dependant on a myriad of complex factors and not simply just the deposit grades. Notably, the Dumont deposit contains a large proportion of awaruite (an alloy of Ni-Fe that is only known to occur in serpentinized dunites), the vast majority of which was recovered to the Dumont Ni concentrate. The recovery of the awaruite to the Dumont Ni concentrate was enhanced by a simple magnetic circuit, which would likely be beneficial in processing Crawford material. Normally, sulphide Ni concentrates are smelted and then refined and for the most part the Ni units are used in stainless steel. The main component of stainless steel is elemental Fe. Typical Fe ore needs to be smelted to drive off the oxygen and/or sulphur. Awaruite being simply a Ni-Fe alloy (with no oxygen/sulphur) makes it a perfect feedstock for stainless steel producers because it provides the two biggest cost components of their end product (Ni & Fe) without any sulphur or oxygen. However, in the Dumont feasibility study, it was assumed that its concentrate would simply be roasted, much like nickel pig iron (NPI) ore from low-grade laterite deposits in Indonesia, the Philippines and New Caledonia (presently, these three countries now supply 52% of the world’s nickel – 28% from Indonesia, ~14% from the Philippines and ~10% from New Caledonia).

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The problem with roasting as a form of processing, is that you get no financial credit for by-product PGE’s, Co. or Cu. The M&I resources at Dumont contain over 1M oz of Pd, 0.46M oz of Pt and 394M lb. of Co. When it comes to by-product metals in Ni sulphide concentrates, the recoveries are often quite poor, and the smelters take a hefty cut of what is recovered. Even if only 33% of the gross value of these metals could have been added to the financial metrics from the Dumont feasibility study, you’d still be talking about over $2.1B in lost revenue over the expected 30 year mine life (~$71M a year). For this reason, Canada Nickel plans to investigate selling a portion of its concentrate to smelters that would pay them for its contained Co and PGM. The PGM layer could end up being very significant for Canada Nickel. With a strike length of over 1.5 km from the main zone and a similar PGM-rich layer also identified in the east zone over 1.2 km in length, the potential could exist to establish a Crawford PGM-rich resource. At several meters thickness over these potential strike lengths, 1M to 2M oz of Pd+Pt could be defined. If so, it would make sense to process this material separately form the main Ni-Co zones to produce a concentrate with much higher PGM grades, exclusively for sale to be smelted (as opposed to being roasted) to capture the value of this material. The project is neither remote nor small scale – all major infrastructure is in place. The Crawford Ni property is located ~42km North of Timmins Ontario and is 15km from Glencore’s massive Kidd Creek Mine and metallurgical complex. Incidentally, the Kidd Creek operation is set to close next year. The Crawford project has access to all infrastructural necessities including water, roads and power provided by nearby sources. As a result, Canada Nickel is well positioned to advance this project at an accelerated rate compared to any of its peers. This local infrastructure should translate into low capital intensity when the project is built making it potentially much more economically viable than Dumont. The Dumont Feasibility Study outlined a major capital outlay of C$1.4B for Phase I of construction with an additional C$814M for an expansion to double throughput. Note also, as we discussed above that the Dumont feasibility study included no by-product revenues from PGM’s or Co.

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Figure 7: Location and Infrastructure


A clean new company. Canada Nickel Company began trading on the Canadian Venture Exchange in February 2020 with 57M shares outstanding and no warrants. An initial financing was completed in May generating total proceeds of C$4.4M for a combination of common flow through shares and purchase warrants. The net proceeds from the financing will enable the company to move forward with exploration at Crawford in the 2020 season including ongoing drilling without having to undergo further dilution. Nickel demand is expected to stay strong. The nickel market has seen steady demand growth over the past decade, primarily due to its use in the manufacturing of stainless steel and has outpaced other metals demand with 9.4% growth in 2018 and 2019. The metal has several other uses in green technology such as batteries, solar power, wind power, electronics and grid power. A major contributor to demand is expected to come from the increasing demand for Lithium Ion Batteries in the Electric Vehicle (EV) market. Recent estimates by Glencore detail that demand for nickel specifically for EV, could increase to over 1.3 Mt by 2030 representing almost 60% of 2018 supply. This is likely going to result in an urgent need for new supply to come online in the next decade. On the supply side, jurisdictional risk plays an important role in the nickel market as 28% of supply comes from Indonesia – together with New Caledonia and the Philippines, roughly half of the worlds supply is contained in relatively unstable jurisdictions.

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Figure 8: Nickel Demand Forecast for the EV Market


Valuation

Relative Valuation With a sizeable maiden resource, the company trades at a discount to peers at $0.01/lb Ni Eq and has tested only a fraction its target structure to date. At a C$70.5M market Cap, 67.1M shares outstanding, and funding for this year’s drilling, the company is favorably positioned to add to its substantial mineral inventory with minimal dilution. Figure 9: Comparable Peers Performance

Source: Company Reports, S&P Global Market Intelligence

The Crawford deposit already ranks among the largest nickel sulphide projects worldwide. With much of the existing supply already in production, the need for new supply makes Crawford an attractive target to mid-tier producers looking for new quality supply in a stable jurisdiction.

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RCS Crawford Nickel Model Because of the many similarities between Crawford and Dumont, we have created a DCF model for the deposit. There are many assumptions made in this endeavour that have yet to be determined, which is why in our valuation we have chosen such a high discount rate (12% after-tax at this time). We have used a smaller upfront capex for Crawford development because the Dumont project has a much higher strip ratio and does not have higher grade material to process in the early years. Thus, the Dumont development scenario includes a great deal of mining and stockpiling of low-grade ore (0.23% Ni) to be processed only in the final 10 years of its 30-year operation. That is essentially the same as having a very substantial pre-strip, which Crawford does not have (the strip ratio during construction at Dumont was pegged at 2.33 to 1.00 and 1.43 to 1.00 in the first ten years of operation compared to our estimates for Crawford of 0.8 to 1.0 during construction and years 1-10. Also, because of the much higher strip ratio at Dumont, far more rolling stock is required to mine, blast, and move all that extra material that is not need at Crawford.

Figure 10: Top 50 Nickel Deposits by Reserve and Resource Tonnage and Grade

Source: Company Reports, S&P Global Market Intelligence

Decar (FPX Nickel Corp.)

Crawford (Canada Nickel)

Crawford Potential -RCS Estimate

Turnagain (GIGA Metals Corp.)

Dumont (Royal Nickel Corp.)

Polar Division (Norilsk Nickel)

Zebediela (URU Metals Ltd.)

Terrafame (Terrafame Oy)

Weda Bay (PT Weda Bay Nickel)

Jinchuan (Jinchuan Group Co., Ltd.)

Yakabindie (BHP Group)

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Figure 11: NAV Summary

Source: Company Reports, RCS Estimates

Figure 12: RCS Mine Model Assumptions


Our model assumes a mineable resource of 900M tonnes grading 0.296% Ni, 0.013% Co and 0.037 g/t Pd+Pt is processed at an initial rate of 45,000 tpd beginning in 2027 and reaching commissioning in 2028 at a capex of US$800M. Our life of mine recoveries of Ni are 51% (ranging from 60% during the early high-grade zones and falling to 42% for the final low-grade material), with 50% recoveries assumed for Co and Pd+Pt.

Development Properties 8% 10% 12% 15% 20%

Crawford Nickel Project, Ontario (100%) $1,879.1 $1,262.6 $843.4 $444.6 $110.1

Total Mine Site After-Tax NPV $1,879.1 $1,262.6 $843.4 $444.6 $110.1

Other Assets and/or Liabilities

Crawford Annex Project, Ontario (80%*) $5.0 $5.0 $5.0 $5.0 $5.0

Other assets/liabilities $0.0 $0.0 $0.0 $0.0 $0.0

Total $5.0 $5.0 $5.0 $5.0 $5.0

Total Pre-Financing NAV (C$M) $1,884.1 $1,267.6 $848.4 $449.6 $115.1

Total Pre-Financing NAVPS (C$/share) $24.62 $16.57 $11.09 $5.88 $1.50

Corporate adjustmentsCorporate G&A ($7.0) ($6.2) ($5.4) ($4.6) ($3.6)

Working capital plus ITM o/w $3.0 $3.0 $3.0 $3.0 $3.0Interest income net of financing expense ($154.5) ($139.1) ($125.6) ($108.3) ($85.7)

Cash Flow from Financing $540.1 $532.4 $521.3 $500.3 $459.7

Total net debt $388.6 $396.2 $398.6 $395.0 $377.0

Total Corporate Adjustments $381.5 $390.1 $393.2 $390.4 $373.4

Total Post-Financing NAV (C$M) $2,265.6 $1,657.7 $1,241.6 $840.0 $488.5

Total Post-Financing NAV (C$/share) $7.25 $5.31 $3.97 $2.69 $1.56

*Under option for up to 80% interest

Key Assumptions Units RCS Estimate

Start Up Year Year 2027

Life of Mine Years 30

Steady State Production tpd 100,000

Mineable Resource Estimate Mt 900

Grades

Nickel % 0.296%

Cobalt % 0.013%

PGMs % 0.037

Recoveries

Nickel % 51%

Cobalt % 50%

PGMs % 50%

Operating & Capital CostsAvg. Total Site Costs LOM US$/t $7.14

Avg. Cash Costs (Net of by-products) LOM US$/lb $4.90

Avg. Cash Costs (Net of by-products) Years 1-10 US$/lb $3.69

Avg. NSR/t ore LOM US$/t $13.8

Initial Capital Requirements US$M $800

Metal Prices

Nickel US$/lb $7.00

Cobalt US$/lb $20.00

PGMs US$/oz $1,300

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Our estimated concentrate grade is 24% Ni and we have used the overall payability forecast from the Dumont feasibility study of ~92%. We have assumed that a small portion of the Ni concentrate is sold to traders or smelters from portions of the deposit that would generate the highest grades of Co+Pd+Pt with the remainder being sold into China to be roasted as per the Dumont feasibility study. Under these assumptions, Ni still generates over 92% of the project revenues. We have also included an expansion to 100,000 tpd at a cost of US$500M beginning in 2032 and reaching full run rate in 2033. This produces Life of Mine (LOM) average annual payable production of 86M lb. of Ni, 1.3M lb. of Co and 5.6k oz Pd+Pt. Payable Ni production ranges from as low as 64M lb. to as high as 123M lb. annual. The mine life is 30 years, the same with the Dumont feasibility study. Our average total site operating costs over the LOM are US$7.14 per tonne of ore and our average NSR/t is US$13.8 using $7.00 Ni, $20.00 Co, a blended PGM price of $1,300 with a C$/US$ exchange rate of 0.71. Our average LOM cash costs net of credits per lb. of payable Ni is US$4.90 but ranges from US$3.51 in the initial years to as high as US$6.29. This produces an after-tax IRR of 23%, a 10% NPV of C$1,263M and a 12% NPV of C$843M (also after-tax). Figure 13: Operational Forecast


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Figure 14: 2019 Nickel Production Ranked on Total Cash Costs

Source: S&P Global Market Intelligence

Asset Overview The Crawford Ni-Co PGM Project The Crawford project is located ~42km North of Timmins; a location which offers access to all the major infrastructure offered by this Ontario mining hub. The property covers 5,383 ha of 100% owned mining claims and Crown Patented lands on which CNC owns a 2% NSR. CNC recently entered into an option agreement with Noble Resources in March 2020 to acquire up to 60% or 80% interest in the latter’s properties via a series of staged payments over 2-3 years (Figure 15).

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Figure 15: Crawford Property and Crawford Annex Claims Under Option


History The Crawford Township remained relatively underexplored until the discovery of the Kidd Creek Mine in 1963 15km away. Drilling between 1964 and 2018 near Crawford totalled ~147 drill holes (~14,600m) and was focused on the Crawford Ultramafic Complex (CUC) where large magnetic anomalies were identified through geophysics flown in the 1960s and 1970s. These surveys highlighted extensive and abundant conductive anomalies lying underneath a thick layer of overburden. With minimal outcrop, drilling remains the only effective way of testing geophysical anomalies which has resulted in limited work being completed in the area. CNC was formed via the consolidation of properties held by Noble Mineral Exploration which operated exploration programs in Crawford Township between 2012-2019. CNC also consolidated interest a central property held Spruce Ridge Resources explored the area between 2017-2019. Infrastructure The property is blessed with access and infrastructure due its closeness to the Timmins mining hub. The property can be accessed year-round via paved highway from Timmins. Other nearby towns which offer access to supplied include Black River-Matheson and Cochrane. Two major powerlines run adjacent to the property transmitting power from the 14MW Lowe Sturgeon hydro electric generating station. Water is accessible year-round from nearby creeks, ponds, and water tables.

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Figure 16: Province Scale Location of the Crawford Project


Geology The Crawford target is located within the Archean-age ultramafic Crawford Complex and is part of a series of important Gold and Ni-Cu (PGE) sulphide camps belonging to the prolific Abitibi Greenstone Belt. Timmins is the worlds largest orogenic Archean greenstone-hosted camp for gold and 15km to the South of the Crawford Township, the Kidd Creek Cu-Zn deposit is the largest, highest grade and deepest producing Archean VMS deposit at ~170Mt at 2.25% Cu, 5.88% Zn, 0.22% Pd and 77 g/t Ag of past production, reserves and resources contained above the 2,290m level. The Crawford project is being characterized as an intrusive mafic to ultramafic sill hosted in the Deloro Assemblage which consists of mafic to felsic calc-alkaline rocks, some local tholeiitic mafic units and an iron formation cap. Geology throughout the CUC is largely inferred from drill core, overburden sampling and geophysics but work to date suggests it shares a similar stratigraphy as Dumont where correlations have been found between the Dumont Sill and the Deloro Assemblage The deposit is outlined within a large 8km x 2km geophysical anomaly and is entirely contained beneath cover. Overburden consists mainly of glacial till, sand clay and lose gravel and varies in thickness from 10-85m. An alteration process known as serpentinization is an important control on mineralization throughout the property. This process consists of the transformation of olivine to liberate nickel into two categories of enriched minerals: sulphide ores such as heazlewoodite and

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awaruite (a nickel iron alloy). This process also produces magnetite; a highly magnetic mineral relative to host rocks, making it a key target for geophysics. Within the deposit itself, significant quantities of magnetite were found in both the Higher-Grade Zone and Lower-Grade Zones of resource at 8.7% and 6.9% respectively. Drilling prior to 2018 did not report assay results for Co, Pd and Pt, however, recent exploration by CNC has demonstrated the potential for an economic zone of PGM in both the East and Main Zones of the main target area. Notably, 9 holes completed by CNC and Noble Resources in 2019 intersected Ni-Cu-PGE mineralization in intervals exceeding 30m in length. Within the Higher-Grade Zone of the current resource, the company has delineated 291.7 koz Pd and 122.4 koz Pt (MI &I). Additionally, in the newly discovered east Zone, the company intersected its best interval yet in Hole CR19-28 which returned the highest-grade nickel interval to date – 55 m of 0.42% Ni and 0.2 g/t Pd + Pt. Figure 17: Recent Drilling Overlying Magnetic Anomaly


The property depicted in Figure 18 shows the main structure at Crawford. The eastern portion of the structure is believed to have been displaced by a northwest trending strike slip fault. Limited areas of the geophysical anomaly that have been tested with drilling from 2018 to 2020.

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Figure 18: Crawford Property Map Showing Fault Location and Drilling


2019 & 2020 Metallurgical Testing A study was commissioned in 2019 by Spruce Ridge Resources to test the economic viability of recovering nickel and other elements in sulphide state from drill core collected throughout the Crawford Ultramafic Complex. The sulphides minerals which were found to contain the highest abundance of Nickel and Cobalt were pentlandite (50%: iron-nickel sulphide), heazlewoodite (35%: sulphur poor, nickel-rich sulphide), awaruite (15%: nickel-iron alloy) and minor godlevskite (nickel-iron sulphide). Further testing in 2019 looked at the liberation of Nickel and Cobalt from serpentinization which were found to be 62% and 77% liberation respectively. In 2020, further testing was completed on core samples to determine the fraction of nickel contained in the two types of ore: the nickel sulphides (pentlandite and heazlewoodite)and the nickel-iron alloy (awaruite) in order to determine the best methods for separation. These tests concluded a combination of magnetic and sulphide flotation processes could be effective for treating the Crawford deposit. Results showed that 89% of the Higher-Grade Zone was contained in nickel sulphide and nickel-iron alloys. In the Lower Grade Zone, some 59% of nickel was contained in the minerals. Figure 19: Mineral Breakdown of Crawford Deposit


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Risks Our view is based on publicly available information and conversations with management. We note that our estimates and view are not without political, technical, geologic or financing risk typical for mining companies. For Canada Nickel Company, three risks are of note.

1. Geologic – Our assumptions for the Crawford project and Canada Nickel’s exploration targets are based on previous drill results and other publicly available geologic data. Should the resource differ materially from our estimate, our fair value would be impacted.

2. Technical – Our estimates are based on a combination of the 2020

NI 43-101 technical report, various company press releases and our estimated parameters. Should the projects develop differently than we assume (capital or operating costs, mining method, etc.) our estimates would be significantly impacted.

3. Financial – Our estimates assume that Canada Nickel is able to

raise sufficient equity to complete next year’s drilling and fund its pro-rata share of mine development costs. We note that should the company need to raise additional equity to fund these projects it would impact our estimates. We note that our estimates would also be impacted if capex significantly exceeds our estimates and additional funding is required.

As new information becomes available, we plan to refine our numbers.

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Appendix A: Management and Directors

Mark Selby – Chairman, CEO & Director Mr. Selby was formally President & CEO of RNC Minerals (Royal Nickel Corporation) where he led a team that successfully raised over $100 million and advanced the Dumont nickel-cobalt project from initial resource to a fully permitted, construction ready project. He has held several senior management roles with Quadra Mining, Inco, and Purolator Courier, and was a partner at Mercer Management Consulting. Since 2001, Mr. Selby has been recognized as one of the leading authorities on the nickel market. He graduated from Queen's University with a Bachelor of Commerce (Honours) and has also served on the boards of multiple junior mining companies and is currently a Director and Chair of Orford Minerals. John Leddy - Director John is Senior Advisor, Legal and Strategic Matters at Royal Nickel Corporation. Mr. Leddy has over 20 years' experience as a business lawyer and in private equity, specializing in M&A, capital raising / structuring and other strategic transactions. He is a former Partner in the Business Law Group (M&A) at Osler, a leading Canadian corporate law firm. Mr. Leddy is a member of the Law Society of Upper Canada, a director of Salt Lake Mining Pty. Ltd and Orford Mining Corporation, and a member of the Audit Committee of Magneto Investments Limited Partnership. Russell Starr - Director Russell has over nineteen years of corporate finance, investment and business development experience and has held senior positions and advisory roles with financial institutions including RBC Capital Markets, Scotia Capital, Orion Securities, and Blackmont. After leaving Bay Street, Russell held senior management roles with Cayden Resources (successfully acquired by Agnico Eagle Mines Limited in 2014), Auryn Resources, and Pivot Pharmaceuticals. He has also served on the Board of multiple junior mining companies. Mr. Starr holds an MBA from the Richard Ivey School of Business, a Master of Arts degree in Economics from the University of Victoria, and a Bachelor of Arts degree in Economics from Queens University. Mr. Starr was also a PhD candidate at McGill University in Econometrics. Jessie Liu-Ernsting - VP Corp Development and investor Relations Jessie has over 15 years of experience in the mining industry, spanning capital projects engineering, debt capital markets, private equity and corporate strategy. Ms. Liu-Ernsting was most recently on the corporate development team at Hudbay Minerals, responsible for formulating and executing on corporate strategy. Jessie previously spent over five years at Resource Capital Funds, sourcing, evaluating, executing and managing investments, gaining expertise in a wide range of commodities and mining services. Before RCF, Jessie provided debt financing solutions in CIBC’s mining corporate credit group. Prior to CIBC, Jessie’s experience at Hatch ad Golder spanned all levels of mining and mineral processing operations design around the world and the development of mining innovation R&D projects. Jessie is a Professional Engineer who holds an Electrical Engineering degree from Queen’s University, and a Schulich School of Business Mining, Finance and Strategy MBA graduate.

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David Smith - Director David is Senior Vice-President, Finance and Chief Financial Officer of Agnico Eagle and has held this position since 2012. He has also held the position of Senior Vice-President, Strategic Planning and Investor Relations. Prior to joining the Company's investor relations team in 2005, Mr. Smith, a Professional Engineer, was a mining analyst and held a variety of mining engineering positions in Canada and abroad. He is a Chartered Director holding a Directorship with Sprott Resource Holdings Inc. and is formerly a Director at eCobalt Solutions Inc. He holds a B.Sc. (Queen’s University) and M.Sc. in Mining Engineering (University of Arizona). Mike Cox - Director Mike has over thirty years of experience in Base Metal operations with Inco Ltd and Vale SA. He has held a number of senior leadership positions in Europe, Canada and Asia including the oversight of operations which have delivered nickel products to consumers for use in multiple generations of nickel batteries. Most recently, Mr. Cox was Head of UK and Asian Refineries at Vale with responsibility for a portfolio of precious metal and nickel refineries. He is now a Managing Partner at CoDa Associates, a consultancy that provides a range of advisory services to the corporate and public sectors in Europe and Asia. Mr. Cox holds a BSc (Hons) in Chemistry and an MBA, both from the University of Glamorgan. Robert Suttie - CFO Robert is the Vice President at Marrelli Support Services, possessing more than 20 years of experience, ten of which were in public accounting prior to his tenure with the Marrelli organization. Mr. Suttie specializes in management advisory services; accounting and the financial disclosure needs of the Marrelli group's public client base. In addition to the Company, Mr. Suttie also serves as CFO for several other junior mining companies listed on the TSX and TSX-V, leveraging his skills and experience to become integral to the reporting issuers. Steve Balch – VP Exploration Steve is an Ontario registered geoscientist with 32 years experience in geophysics, specializing in the magnetic and electromagnetic methods, but also with experience in large exploration compilations. After working at Inco for six years in the Sudbury Basin and at Voisey’s Bay, Steve joined Aeroquest in 2001 and helped develop the AeroTEM system, focusing on the on-time measurements of the linear triangular waveform. In 2007, Mr. Balch founded Triumph Instruments and developed the AirTEM system, a multi-coil helicopter-borne EM system that is now in use in Mexico, China, Canada and Eastern Europe. Steve has also been active in borehole geophysics and has worked to develop new technology including north-seeking gyros, temperature compensated induction conductivity probes, UAV-based magnetometers and high sensitivity magnetic gradiometers.

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Jacob Willoughby | VP, Equity Research Analyst Taylor Combaluzier | Associate, Research Paul Kostuik | Associate, Research Red Cloud Securities Inc. 105 King Street East, 2nd Floor Toronto ON, M5C 1G6 [email protected] www.redcloudsecurities.com/research-home Disclosure Requirement Red Cloud Securities Inc. is registered as an Investment Dealer in Ontario, Quebec, Alberta and British Columbia and is a member of the Investment Industry Organization of Canada (IIROC). Part of Red Cloud Securities Inc.'s business is to connect mining companies with suitable investors. Red Cloud Securities Inc., its affiliates and their respective officers, directors, representatives, researchers and members of their families may hold positions in the companies mentioned in this document and may buy and/or sell their securities. Additionally, Red Cloud Securities Inc. may have provided in the past, and may provide in the future, certain advisory or corporate finance services and receive financial and other incentives from issuers as consideration for the provision of such services. Red Cloud Securities Inc. has prepared this document for general information purposes only. This document should not be considered a solicitation to purchase or sell securities or a recommendation to buy or sell securities. The information provided has been derived from sources believed to be accurate but cannot be guaranteed. This document does not take into account the particular investment objectives, financial situations, or needs of individual recipients and other issues (e.g. prohibitions to investments due to law, jurisdiction issues, etc.) which may exist for certain persons. Recipients should rely on their own investigations and take their own professional advice before investment. Red Cloud Securities Inc. will not treat recipients of this document as clients by virtue of having viewed this document. Red Cloud Securities Inc. takes no responsibility for any errors or omissions contained herein, and accepts no legal responsibility for any errors or omissions contained herein, and accepts no legal responsibility from any losses resulting from investment decisions based on the content of this report. Company Specific Disclosure Details

Company Name Ticker Symbol Disclosures Canada Nickel Company Inc. TSXV:CNC 3,4

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12. There are material conflicts of interest with Red Cloud Securities Inc. or the analyst who prepared the report and the issuer.

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