Premium Nickel Resources Ltd

Executive officer Compensation

For 2023, we are providing compensation disclosure that complies with the requirements of the Canadian Securities Administrators, together with certain additional disclosure, without compromising required Canadian disclosure. As a foreign private issuer (as defined under the applicable SEC rules), we are permitted by Item 402(a)(1) of SEC Regulation S-K to respond to this Item 11 by providing the information required by Items 6.B., 6.E.2 and 6.F of Form 20-F.

The purpose of this section is to describe the compensation of the executive officers and the directors of the Company in accordance with Form 51-102F6V –Statement of Executive Compensation – Venture Issuersof the Canadian Securities Administrators.

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For the financial year ended December 31, 2023, the executive officers of the Company were:

Director and Executive Officer Compensation, Excluding Compensation Securities

The following table sets forth all compensation paid, payable, awarded, granted, given or otherwise provided, directly or indirectly, by the Company, or a subsidiary of the Company, to each executive officer and director, in any capacity, other than Options, DSUs and other compensation securities, for the two most recently completed financial years.

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Table of Compensation Excluding Compensation Securities

Notes:

External Management Companies

See “Employment, Consulting and Management Agreements” below for disclosure relating to any external management company employing or retaining individuals acting as executive officers of the Company, or that provide the Company’s executive management services.

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Options and Other Compensation Securities

The following table sets forth certain information in respect of all compensation securities granted or issued to each executive officer and director by the Company or one of its subsidiaries in the financial year ended December 31, 2023, for services provided or to be provided, directly or indirectly, to the Company or any of its subsidiaries.

Compensation Securities

Notes:

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Exercise of Compensation Securities

The following table sets forth each exercise of compensation securities by an executive officer or director of the Company during the financial year ended December 31, 2023.

Exercise of Compensation Securities by Directors and Executive Officers

Notes:

Option Plans and Other Incentive Plans

Amended Option Plan

The Amended Option Plan is a “fixed” share option plan, pursuant to which PNRL may issue up to 27,100,000 Options to eligible persons (as defined below). As of the date hereof, 14,065,321 Options are outstanding under the Option Plan.

Incentive Options under the Amended Option Plan may be granted by the Board to eligible persons, who are directors, officers, employees or Consultants of PNRL or its subsidiaries, eligible persons who are employees of a company providing management services to PNRL, or, in certain circumstances, charitable organizations. Options granted under the Amended Option Plan have a maximum exercise period of up to 10 years, as determined by the Board.

The Amended Option Plan limits the number of Options which may be granted to any one individual to not more than 5% of the total Common Shares in any 12-month period (unless otherwise approved by the “disinterested shareholders” of the Company). A “disinterested shareholder” is a shareholder who is not a director, officer, promoter, or other insider of the Company, or its associates or affiliates, as such terms are defined under theSecurities Act (Ontario). In addition, unless otherwise approved by the disinterested shareholders, the number of Common Shares issuable under the Amended Option Plan to all insiders of Company as a group shall not exceed 10% of the total Common Shares at any point in time.

The number of Options granted to any one Consultant or investor relations service provider in any 12-month period must not exceed 2% of the total issued Common Shares. Options granted to investor relations service providers shall vest in stages over at least a one-year period, in accordance with the policies of the Exchange. Subject to the foregoing, any Options granted under the Amended Option Plan will not be subject to any vesting schedule, unless otherwise determined by the Board or required by the policies of the Exchange.

The number of Options granted to all eligible charitable organizations in the aggregate must not exceed 1% of the Common Shares on the date of grant, which Options shall expire on or before the earlier of: (i) the date that is ten years from the grant date; or (ii) the 90th day following the date that the holder of such Options ceases to be an eligible charitable organization under the Amended Option Plan.

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Options under the Amended Option Plan may be granted at an exercise price which is at or above the current discounted market price (as defined under the policies of the Exchange) on the date of the grant. In the event of the death or permanent disability of an optionee, any Option granted to such optionee will be exercisable upon the earlier of 365 days from the date of death or permanent disability, or the expiry date of the Option. In the event of the resignation of an optionee, or the termination or removal of an optionee without just cause, any vested Option granted to such optionee will be exercisable for a period ending on the earlier of: (i) the expiry date of such Option determined as at the date of grant thereof; and (ii) the expiration of 90 days (or such longer period, not to exceed 12 months, as may be specified by resolution of the Board) following the effective date of such resignation or termination. In the event of termination for cause, any unexercised Option granted to such optionee will be cancelled as at the date of termination.

Options may be exercised by the holder thereof: (i) by delivering to PNRL a notice specifying the number of Common Shares in respect of which the Option is exercised together with payment in full of the exercise price for each such Common Share; (ii) through a cashless exercise mechanism whereby the Company has certain arrangements with a brokerage firm; or (iii) through a net exercise mechanism whereby the optionee receives only the number of Common Shares that is equal to the quotient obtained by dividing (A) the product of the number of Options being exercised and the difference between the 5-day VWAP on the Exchange immediately preceding the exercise and the exercise price of the subject Option by (B) the 5-day VWAP of the underlying Common Shares.

DSU Plan

The DSU Plan was adopted by the Board on December 26, 2022. The DSU Plan enables the Company upon approval by the Board to grant DSUs to eligible non-management directors.

The following is a summary of the principal terms of the DSU Plan, which is qualified in its entirety by reference to the text of the DSU Plan, a copy of which is attached on Appendix “G” – “DSU Plan” to this Information Circular.

The purpose of the DSU Plan is to advance the interests of the Company and its subsidiaries by: (i) increasing the proprietary interests of non-executive directors in the Company; (ii) aligning the interests of non-executive directors of the Company with the interests of the holders of Common Shares generally; and (iii) furnishing non-executive directors with an additional incentive in their efforts on behalf of the Company.

Each director of the Company in office on December 26, 2022, being the effective date of the DSU Plan (the “Effective Date”) became a member of the DSU Plan (“DSUP Member”). Each person who becomes a director at any time subsequent to the Effective Date shall thereupon, without further or other formality, become a DSUP Member. For greater certainty, no Investor Relations Service Providers (as defined in the policy of the Exchange) may receive any DSUs under the DSU Plan.

The aggregate number of Common Shares made available for issuance from treasury under the DSU Plan shall not exceed 5,000,000 Common Shares, provided that the number of Common Shares reserved for issuance from treasury under the DSU Plan and all other security-based compensation arrangements of the Company and its subsidiaries shall not, in the aggregate, exceed 20% of the number of Common Shares then issued and outstanding. As of the date hereof, 1,113,450 DSUs have been granted under the DSU Plan.

Each DSU will have a notional value equal, on any particular date, to the volume weighted average trading price of the Common Shares for the five (5) consecutive trading days prior to such date (“Market Value”).

The grant of DSUs under the DSU Plan is subject to a number of restrictions:

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aggregate, exceed 10% of the issued and outstanding Common Shares, calculated on a non-diluted basis (unless disinterested shareholder approval is obtained pursuant to the Corporate Finance Manual of the Exchange);

The Board may, at any time, grant DSUs to directors of the Company in consideration of service for any period specified in the resolution authorizing such grant (except in lieu of accrued and unpaid compensation amounts).

In addition, DSUP Members may elect to receive DSUs instead of cash remuneration in respect of his or her annual retainer, committee retainer and meeting fees (or any portion thereof). The number of DSUs to be notionally credited to DSUP Members in lieu of cash remuneration shall be determined on a quarterly basis, as of the final day of any quarterly period (the “Crediting Date”), calculated as the quotient obtained when (i) the aggregate value of the cash remuneration that would have been paid to such DSUP Member, is divided by (ii) the Market Value as of the last day of such quarterly period.

Unless otherwise specified by the Board and/or included in any award agreement, DSUs credited to a DSUP Member shall be fully vested on the applicable Crediting Date.

The DSUs credited to the account of a director may only be redeemed following the date upon which the holder ceases to be a director. Depending upon the country of residence of a director, the DSUs may be redeemed at any time prior to December 15 in the calendar year following the year in which the holder ceases to be a director and may be redeemed in as many as four installments. Upon redemption, the holder is entitled to a cash payment equal to the number of DSUs redeemed multiplied by the Market Value on that date. The Company has the right to elect to settle redemption payments in Common Shares in lieu of cash.

The Company will deduct or withhold from any payment or settlement in Common Shares, for the benefit of a DSUP Member, any amount required in order to comply with the applicable provisions of any federal or provincial law relating to the withholding of tax or the making of any other source deductions.

DSUs are different from Common Shares and will not entitle a DSUP Member to any shareholder rights, including, without limitation, voting rights, dividend entitlement or rights on liquidation.

The Board may amend, suspend or terminate (and re-instate) the DSU Plan in whole or in part, or amend the terms of DSUs credited in accordance with the DSU Plan, without approval of the shareholders. However, such suspension, termination or amendment is subject to the receipt of all required regulatory approvals including, without limitation, the approval of the Exchange.

If any such amendment, suspension or termination will materially or adversely affect the rights of a DSUP Member with respect to DSUs credited to such director, then the written consent of the DSUP Member will be obtained. However, a DSUP Member’s written consent will not be required if such amendment, suspension or termination is required in order to comply with applicable laws, regulations, rules, orders of government or regulatory authorities or the requirements of any stock exchange on which shares of the Company are listed.

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In addition, the Company may not make the following amendments to the DSU Plan without the approval of the shareholders: (i) an amendment to remove or exceed the insider participation limit prescribed by the Corporate Finance Manual of the Exchange; (ii) an amendment to increase the maximum number of Common Shares made available for issuance from treasury under the DSU Plan; (iii) an amendment to modify the definition of “Eligible Director” in the DSU Plan; or (iv) an amendment to the amending provision within the DSU Plan.

If the Board (or such other committee of the directors appointed to administer the DSU Plan) terminates the DSU Plan, DSUs previously credited to DSUP Members will remain outstanding and in effect and be settled in due course in accordance with the terms of the DSU Plan.

Except as otherwise may be expressly provided for under the DSU Plan or pursuant to a will or by the laws of descent and distribution, no right or interest of a DSUP Member under the DSU Plan is assignable or transferable.

All DSUs granted under the DSU Plan shall be and remain subject to any incentive compensation clawback or recoupment policy currently in effect or as may be adopted by the Board.

Employment, Consulting and Management Agreements

The following is a description of the material terms of each agreement or arrangement under which compensation was provided during the financial year ended December 31, 2023 or is payable in respect of services provided to the Company or any of its subsidiaries that were performed by a director or executive officer.

Keith Morrison

Keith Morrison and NAN entered into an employment agreement dated December 15, 2014, setting out the terms and conditions of Mr. Morrison’s employment as Chief Executive Officer of the Company.

Effective on June 1, 2018, NAN and Mr. Morrison agreed to amend the terms of Mr. Morrison’s employment from direct employment to contracted consultant. In connection with the foregoing, the Company and Lacnikdon Limited, a private company controlled by Mr. Morrison, entered into a service agreement, pursuant to which Lacnikdon Limited provided the services of Mr. Morrison as the Company’s Chief Executive Officer. Upon the closing of the RTO, PNRL entered into a services agreement with Breniklan Limited, a private company controlled by Mr. Morrison for his continuing service post the RTO. Under the services agreement, Breniklan Limited is entitled to a monthly service fee of $35,506 plus applicable tax, effective August 3, 2022. The monthly fee was further increased to $46,378 from January 1, 2023.

If the services agreement is terminated without cause by the Company within six months following a change of control event (a “Change of Control Window”), the Company shall pay to Mr. Morrison in lump sum or in monthly installments a cash amount equal to twenty-four months service fees at the date of termination.

Sarah Zhu

Sarah Zhu and NAN entered into an employment agreement dated April 28, 2018, setting out the terms and conditions of Ms. Zhu’s employment as Chief Financial Officer of the Company.

Effective on October 1, 2020, NAN and Ms. Zhu agreed to amend the terms of Ms. Zhu’s employment from direct employment to contracted consultant. In connection with the foregoing, NAN and WJZHU Inc., a private company controlled by Ms. Zhu, entered into a service agreement, pursuant to which WJZHU Inc. provided the services of Ms. Zhu as the Company’s Chief Financial Officer. Under the service agreement, WJZHU Inc. is entitled to a monthly service fee of $20,667 per month plus applicable tax.

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If the service agreement is terminated without cause by the Company, the Company shall pay to Ms. Zhu, in lump sum or in monthly installments, a cash amount equal to six months plus one month, calculated on a pro rata basis, for each year of continuous service, to a cumulative maximum period of twelve months.

Ms. Zhu stepped down from her position as Chief Financial Officer of the Company effective July 26, 2023 and continues with the Company in a senior accounting role during a transitionary period.

Boris Kamstra

PNRIL entered into a consulting agreement with Mr. Kamstra dated January 1, 2022. Under the agreement, Mr. Kamstra is responsible for providing leadership for and input to the design, build, redevelopment and commissioning of the Company’s projects in Botswana, delivering Stage 3 (Hot Commissioning) wherein the projects are producing commercial levels of saleable concentrates, and assuming responsibility and authority for the effective leadership and management of the re-engineering, engineering, construction and commissioning of the Botswana projects so as to confidently and reasonably project financial results in line with objectives as provided by the Company. Mr. Kamstra is the Chief Operating Officer of PNRIL.

PNRIL agreed to pay Mr. Kamstra a consulting fee of US$20,000 for the month of January 2022, US$40,000 for the month of February 2022 and US$50,000 per calendar month thereafter.

The agreement may be terminated by either PNRIL or Mr. Kamstra on 90 days’ written notice.

Montwedi Mphathi

PNRPL entered into a consulting agreement dated February 11, 2020 with First Land (Pty) Ltd. to provide the services of Montwedi Mphathi. The initial services to be provided included the organization and representation of PNRPL at a series of meetings with local stakeholders, potential employees and government officials. The services were subsequently broadened to include the role of Chief Executive Officer of PNRPL.

Total consulting fees paid under the agreement were $465,992 in 2022 and $501,946 in 2023, including severance payment.

Mr. Mphathi departed PNRPL on July 21, 2023.

Charles Riopel

Holding Latitude 45 Inc., a private company controlled by Mr. Riopel, provided the services of Mr. Riopel as Executive Chairman. Total consulting fees paid to Holding Latitude 45 Inc. were $252,500 in 2022 and $157,500 in 2023. Mr. Riopel resigned as a director of the Company effective August 2, 2023.

Estimated Incremental Payments

The following shows the estimated incremental payments that would be payable to each of the executive officers of the Company in the event of a change of control or termination without cause of such executive officers on December 31, 2023.

Notes:

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Note:

Oversight and Description of Director and Executive Officer Compensation

The Company has a human resources and compensation committee (the “HRCC”), currently comprised of John Hick (Chair), Jason LeBlanc and William O’Reilly. The HRCC is responsible for overseeing the Company’s remuneration policies and practices and determining the compensation of the executive officers and directors.

The Company’s executive compensation program has three principal components: base salaries, consulting fees, incentive bonus plans and Options.

Base Salary

The Company provides executive officers with base salaries or consulting fees, which represent their minimum compensation for services rendered, or expected to be rendered. The executive officers’ base compensation depends on the scope of their experience, responsibilities, leadership skills, performance, length of service, general industry trends and practices, competitiveness and the Company’s existing financial resources.

The amount of base compensation is determined through negotiation of employment terms with each executive officer and is determined on an individual basis. While base compensation is intended to fit into the Company’s overall compensation objectives by serving to attract and retain talented executive officers, the size of the Company and the nature and stage of its business also impacts the level of base compensation. Compensation is set with informal reference to the market for similar jobs in Canada and internationally.

Incentive Bonuses

Incentive bonuses, in the form of cash payments or equity grants, are designed to add a variable component of compensation based on corporate and individual performance for executive officers and employees. As the Company grows and develops its projects, it is expected that an annual incentive award program will be formalized that will clearly articulate performance objectives and specific measurable goals that will be linked to individual performance criteria set for the executive officers. No bonuses were paid to executive officers or employees during the Company’s financial year ended December 31, 2023.

Option-Based Awards

Options are granted pursuant to the Option Plan to provide an incentive to the directors, officers, employees and Consultants of the Company to achieve the longer-term objectives of the Company, to give suitable recognition to the ability and industry of such persons who contribute materially to the success of the Company and to attract and retain persons of experience and ability, by providing them with the opportunity to acquire an increased proprietary interest in the Company. The Company awards Options based upon the recommendation of the HRCC, which recommendation is based on the HRCC’s review of a proposal from the Chief Executive Officer. Previous grants of Options are taken into account when considering new grants. During the year ended December 31, 2023, 3,833,277 Options were granted under the Option Plan and vest annually in equal thirds beginning on the first anniversary of the date of grant.

The implementation of new incentive share option plans and amendments to the Option Plan are the responsibility of the HRCC.

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DSU Awards

During the year ended December 31, 2023, DSUs have been granted to the following non-executive directors:

Note:

Other Compensation

Other than as outlined herein, the Company has no other forms of compensation, although payments may be made from time to time to individuals, or the companies they control, for the provision of consulting services. Such consulting services are paid for by the Company at competitive industry rates for work of a similar nature by reputable arm’s length services providers.

Compensation Risks

The HRCC is responsible for considering, reviewing and establishing executive compensation programs, and whether the programs encourage unnecessary or excessive risk taking. The Company believes the programs are balanced and do not motivate unnecessary or excessive risk taking.

Base salaries are fixed in amount and thus do not encourage risk taking. The Company does not currently have any annual incentive or bonus programs.

Option awards are important to further align the interests of executive officers with those of the Common Shareholders. The ultimate value of the awards is tied to the Company’s share price and, since awards are staggered and typically subject, in large part, to delayed vesting, they help ensure that executive officers have significant value tied to long-term share price performance.

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Hedging

The Company has not established any policies related to the purchase by directors or executive officers of financial instruments (including prepaid variable forward contracts, equity swaps, collars, or units of exchange funds) that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by any director or executive officer of the Company.

Pension Disclosure

No pension, retirement or deferred compensation plans, including defined contribution plans, have been instituted by the Company and none are proposed at this time.