Western Uranium Corporation
330
Bay Street, Suite 1400
Toronto,
Ontario M5H 2S8
Phone:
(970) 864-2125
Western Uranium Corporation hereby furnishes a copy of its Form
10-K annual report for the year ended December 31, 2017 in satisfaction of the requirement to provide its shareholders with an
“annual report to security holders” pursuant to proxy rule 14a-3(b) of the U.S. Securities and Exchange Commission.
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December
31, 2017
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________
to ___________________
Commission file number:
000-55626
Western
Uranium Corporation
(Exact Name of Registrant as Specified in
its Charter)
Ontario, Canada
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98-1271843
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(State of other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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330 Bay Street, Suite 1400
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Toronto, Ontario, Canada
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M5H 2S8
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(Address of Principal Executive Offices)
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(Zip Code)
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(970) 864-2125
(Registrant’s Telephone Number, including Area Code)
SECURITIES REGISTERED PURSUANT TO SECTION
12(b) OF THE ACT:
Title of Each Class
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Name of Each Exchange on Which Registered
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None
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SECURITIES REGISTERED PURSUANT TO SECTION
12(g) OF THE ACT:
Common Shares
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by checkmark whether the registrant (1) 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. Yes ☒ No ☐
Indicate by check mark whether the Registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes ☒ No ☐
Indicate by checkmark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging
growth company” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer ☐
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Accelerated Filer ☐
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Non-Accelerated Filer ☐ (Do not check if a smaller reporting company)
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Smaller Reporting Company ☒
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Emerging Growth Company ☒
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If an emerging growth company, indicate
by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 30, 2017, the aggregate market value of the common
stock held by non-affiliates of the registrant was $10,142,265.
As of March 31, 2018, there were
20,510,194 shares of common stock, no par value, outstanding
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DOCUMENTS INCORPORATED BY REFERENCE
None
WESTERN URANIUM CORPORATION
FORM 10-K
TABLE OF CONTENTS
USE OF NAMES
As used in this Annual Report on Form 10-K, unless the context
otherwise requires, the terms “we,” “us,” “our,” “Western” and “WUC”,
or the “Company” refer to Western Uranium Corporation, an Ontario Canadian corporation, and its subsidiaries.
CURRENCY
The accounts of the Company are reported
in U.S. dollars. All dollar amounts referenced in this Annual Report on Form 10-K and the consolidated financial statements are
stated in U.S. dollars.
FORWARD-LOOKING STATEMENTS AND INTRODUCTION
The statements contained in this document that are not purely
historical are “forward-looking statements.” Although we believe that the expectations reflected in such forward-looking
statements, including those regarding future operations, are reasonable, we can give no assurance that such expectations will prove
to be correct. Forward-looking statements are not guarantees of future performance and they involve various risks and
uncertainties. Forward-looking statements contained in this document include statements regarding our proposed services,
market opportunities and acceptance, expectations for revenues, cash flows and financial performance, and intentions for the future. Such
forward-looking statements are included under Item 1. “Business” and Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations”. All forward-looking statements included
in this document are made as of the date hereof, based on information available to us as of such date, and we assume no obligation
to update any forward-looking statement. It is important to note that such statements may not prove to be accurate and
that our actual results and future events could differ materially from those anticipated in such statements. Among the
factors that could cause actual results to differ materially from our expectations are those described under Item 1. “Business,”
Item 1A. “Risk Factors” and Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations”. All subsequent written and oral forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by this section and other factors included elsewhere in this document.
PART I
ITEM 1. BUSINESS
CORPORATE HISTORY
Western Uranium Corporation was incorporated in December 2006
under the Ontario Business Corporations Act and was formerly a non-listed reporting issuer subject to the rules and regulations
of the Ontario Securities Commission. On November 20, 2014, the Company completed a listing process on the Canadian Securities
Exchange ("CSE"). As part of that process, the Company acquired 100% of the issued and outstanding shares of Pinon Ridge
Mining LLC ("PRM"), a Delaware limited liability company. The transaction constituted a reverse takeover of Western by
PRM. After obtaining appropriate shareholder approvals, the Company subsequently reconstituted its Board of Directors and senior
management team.
On August 18, 2014, the Company closed on the purchase of certain
mining properties in Colorado and Utah from Energy Fuels Holding Corp. Assets purchased included both owned and leased lands in
Utah and Colorado and all represent properties that have been previously mined for uranium to varying degrees in the past. The
acquisition included the purchase of the Sunday Mine Complex. The Sunday Mine Complex is located in western San Miguel County,
Colorado. The complex consists of the following five individual mines: the Sunday mine, the Carnation mine, the Saint Jude mine,
the West Sunday mine and the Topaz mine. The operation of each of these mines requires a separate permit and all such permits have
been obtained by Western and are currently valid. In addition, each of the mines has good access to a paved highway, electric power
to existing declines, office/storage/shop and change buildings, and extensive underground haulage development with several vent
shafts complete with exhaust fans. The Sunday Mine Complex is where the Company anticipates it would start mining and Ablation
operation, since the complex is ready to be mined.
On September 16, 2015, Western completed its acquisition of
Black Range, an Australian company that was listed on the Australian Securities Exchange until the acquisition was completed. The
acquisition terms were pursuant to a definitive Merger Implementation Agreement entered into between Western and Black Range. Pursuant
to the agreement, Western acquired all of the issued shares of Black Range by way of Scheme of Arrangement (“the Scheme”)
under the Australian Corporation Act 2001 (Cth) (the "Black Range Transaction"), with Black Range shareholders being
issued common shares of Western on a 1 for 750 basis. On August 25, 2015, the Scheme was approved by the shareholders of Black
Range and on September 4, 2015, Black Range received approval by the Federal Court of Australia. In addition, Western issued to
certain employees, directors and consultants options to purchase Western common shares. Such stock options were intended to replace
Black Range stock options outstanding prior to the Black Range Transaction on the same 1 for 750 basis.
In connection with the Black Range Transaction, Western acquired
the net assets of Black Range. These net assets consist principally of interests in a uranium complex of mines located in Colorado
(the “Hansen-Taylor Complex”) and a 100% interest in a 25 year license for ablation mining technologies (“Ablation”)
and related patents from Ablation Technologies, LLC. The Hansen-Taylor Complex is principally a sandstone-hosted deposit that
was discovered in 1977 which was permitted for mining in 1981. Ablation is a low cost, purely physical method of uranium and vanadium
ore extraction.
Furthermore, related to Ablation in connection with the acquisition
of Black Range Minerals Ltd. (“Black Range”), the Company assumed a call option agreement between Black Range and Mr.
George Glasier. Prior to the Black Range Transaction, George Glasier, the Company’s CEO, who is also a director (“Seller”),
transferred his interest in a former joint venture with Ablation Technologies, LLC to Black Range. In connection with the transfer,
Black Range issued 25 million shares of Black Range common stock to Seller and committed to pay $500,000 AUD ($372,000 USD) to
Seller within 60 days of the first commercial application of the Ablation technology. Western assumed this contingent payment obligation
in connection with the Black Range Transaction.
The Ablation mining process is dramatically different from conventional
mining techniques. Subject to regulatory approvals, the benefits of Ablation are as follows:
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Mining, crushing, and separation of uranium and vanadium, used most effectively, occurs underground (inside the mine). Under
this approach the costs of moving material to the surface are less as 85%-90% of the mined material remains underground and is
never brought outside the mine.
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Less radiometric exposure throughout the process due to reduced waste rock on the surface and after the milling process less
tailings. Overall surface waste material is reduced and the time duration of material handling is reduced.
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Lower costs for transportation of post-ablated material from the mine site to the mill site because 85-90% of the mined material
would not be taken to the mill.
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Once the ablated material reaches the mill, the acid consumption at the mill and power is much less due to the lower quantity
but more concentrated material moving through the milling process.
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Ablation mining technology can be used on legacy uranium stockpiles in the Western United States. WUC would ablate these stockpiles,
removing 85-90% of the uranium. This is an application through which ablation mining technology could positively contribute to
the 'greening of the environment'. According to a study there are approximately 4,225 legacy uranium mines from the 1940-1970 period
throughout the Western United States, most of which have waste stockpiles.
In the estimation of management, Ablation mining allows the
cost of production of uranium to be reduced by 33-44%.
Our common shares are listed on the Canadian Securities Exchange,
also known as the “CSE,” under the symbol “WUC”, and are also quoted in the United States on the OTCQX
Best Market under the symbol “WSTRF.” We are headquartered in Ontario, Canada with mining operations in the two U.S.
states of Utah and Colorado. We have two full-time employees. The mailing address of our headquarters is 330 Bay Street, Suite
1400, Toronto, Ontario, M5H 2S8, Canada, and the telephone number at that location is (970) 864-2125. Our corporate website is
located at http://www.western-uranium.com/.
We are an “emerging growth company” as that term
is defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act defines an “emerging growth
company” as one that had total annual gross revenues of less than $1,000,000,000 during the last fiscal year. Section 102(b)
(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Securities Exchange Act) are required to comply with the new or revised financial
accounting standard. The JOBS Act also provides that a company can elect to opt out of the extended transition period provided
by Section 102(b)(1) of the JOBS Act and comply with the requirements that apply to non-emerging growth companies but any such
election to opt out is irrevocable.
Our wholly-owned subsidiaries are Western Uranium Corp., Pinon
Ridge Mining LLC, Black Range Minerals Limited, Black Range Copper Inc., Ranger Resources Inc., Black Range Minerals Inc., Black
Range Minerals Colorado LLC, Black Range Minerals Wyoming LLC, Haggerty Resources LLC, Ranger Alaska LLC, Black Range Minerals
Utah LLC, Black Range Minerals Ablation Holdings Inc. and Black Range Development Utah LLC.
OUR COMPANY
Western is in the business of exploring, developing, mining
and production of its uranium and vanadium resource properties.
Western is an exploration stage company for purposes of Industry
Guide 7 of the U.S. Securities and Exchange Commission (“SEC”). Industry Guide 7 states that mining companies like
ours can be classified into three stages: exploration, development, or production. Exploration stage includes all companies engaged
in the search for mineral deposits, which are not in either the development or production stage. In order to be classified as a
development or production stage company, the Company must have already established reserves. The Company has not established reserves
for purposes of Industry Guide 7.
Our mineral properties are located on the western Colorado and
Utah plateau of south western Colorado and adjacent areas of the western United States. Our primary focus is bringing the fully
permitted Sunday Mine Complex into production using the Ablation technology, developing the Hansen Project and the commercialization
of the Ablation mineral concentration technology.
The Sunday Mine Complex is located in western San Miguel County,
Colorado. The complex consists of the following five individual mines: the Sunday mine, the Carnation mine, the Saint Jude mine,
the West Sunday mine and the Topaz mine. The operation of each of these mines requires a separate permit and all such permits have
been obtained by Western and are currently valid. In addition, each of the mines has good access to a paved highway, electric power
to existing declines, office/storage/shop and change buildings, and extensive underground haulage development with several vent
shafts complete with exhaust fans.
We have acquired a license (“Ablation”), which provides
a low cost, purely physical, method of uranium and vanadium ore extraction.
No chemicals are added in the process, yet very high mineral recoveries can be achieved with considerable mass reduction; facilitating
the separation of a high-value, high-grade ore product from a coarse-grained barren “clean sand” product.
Application of Ablation is expected to have a very positive
effect on the development of not only our Sunday Mine Complex, but also most of our and others’ uranium deposits, because
it significantly reduces both capital and operating costs. Extensive test work has shown that from amenable sandstone-hosted uranium
ore types, typically more than 90% of the uranium mineralization can be separated into 10-20% of the initial sample mass.
As discussed below, there remain certain regulatory hurdles
to overcome in order to deploy Ablation under the most economical configuration possible. This would involve pursuing additional
regulatory determinations from the Colorado Department of Public Health and Environment (“CDPHE”) and/or the Nuclear
Regulatory Commission (“NRC”).
OUR STRATEGY
Our vision is to become a leading uranium and vanadium developer
and producer. Our strategy is to build value for stockholders by advancing our projects towards production. The recent increase
in the price of vanadium has increased the relative importance of this resource to the Company. Hence, Western is increasingly
able to baseload mine production on the basis of price improvement in uranium markets and/or the increase the duration of its vanadium
contracts. The Company holds an exclusive 25 year license to use Ablation, a proven technology that we anticipate will improve
the efficiency of the sandstone-hosted uranium mining process. The license agreement was entered into on March 17, 2015 and expires
on March 16, 2040. There are no remaining license fee obligations and there are no future royalties due under the agreement. The
Company has an exclusive right to the Ablation, including the right to sub-license the technology to other third parties. The Company
may not sell or assign the Ablation license.
At any time we may have acquisition or partnering opportunities
in various stages of active review, including, for example, our engagement of consultants and advisors to analyze particular opportunities,
analysis of technical, financial and other confidential information, submission of indications of interest, participation in preliminary
discussions and negotiations and involvement as a bidder in competitive processes.
Capital Raising
On March 31, 2017, the Company completed a private placement
of 634,424 units at a price of CAD $1.75 (USD $1.35) per unit for gross proceeds of CAD $1,110,263 (USD $835,805) and net proceeds
of CAD $1,066,223 (USD $801,160). Each unit consisted of one share of the Company’s common stock and a warrant for the purchase
of one share of the Company’s common stock. Each warrant is immediately exercisable at a price of CAD $3.25 and expires five
years from the date of issuance.
On September 15, 2017, the Company completed a private placement
of 509,763 units at a price of CAD $0.90 (USD $0.74) per unit for gross proceeds of CAD $458,787 (USD $376,022) and net proceeds
of CAD $418,880 (USD $343,105). Each unit consisted of one share of common stock and one warrant. Each warrant is immediately exercisable
at a price of CAD $1.40 and expires five years from the date of issuance. The Company also issued broker warrants to purchase 21,751
shares of common stock at a price of CAD $1.40 per common share, which expire two years from the date of issuance.
On December 29, 2017, the Company completed a private placement
of 426,334 units at a price of CAD $0.90 (USD $0.72) per unit for gross proceeds of CAD $383,071 (USD $305,918) and net proceeds
of CAD $367,059 (USD $293,131). Each unit consisted of one share of common stock and a warrant to purchase one half of one share
of common stock. Each warrant is immediately exercisable at a price of CAD $1.50 and expires two years from the date of issuance.
The Company also issued broker warrants to purchase 9,310 shares of common stock at a price of CAD $1.50 per common share, which
expire two years from the date of issuance.
During the year ended December 31, 2017, the Company issued
an aggregate of 1,570,521 shares of common stock in connection with these private placements.
Uranium Production
The timing for commencement of uranium production is uncertain.
Western continues to position itself for flexibility with the goal of beginning production as expeditiously as possible once market
conditions for production of U308 and/or vanadium are favorable. There are multiple variables that will drive the Company’s
production strategy which will most likely be dependent upon the intersection of contracted price levels and Ablation regulation
and application factors. In order to minimize costs, Western plans to commence production at the Sunday Mine Complex due to the
substantial existing infrastructure from years of previous production. However, permitting and preparation costs will be driven
by the approach to the application of Ablation and relevant regulatory requirements.
Company management believes the key production determinant will
be the application of Ablation. In December 2016, the issuance of a decision letter by the Colorado CDPHE enabled the use of Ablation
at the Sunday Mine Complex in the state of Colorado under milling license regulations which also recognized the appropriateness
of exemptions to certain milling regulatory requirements. The Company’s attorneys are not fully in agreement with aspects
of the decision letter, thus the Company expects to pursue additional regulatory clarifications which would make the application
of Ablation potentially more economically advantageous for the Company. While resource prices are below target levels, the Company
is focusing on improving the regulatory regime which governs the application of Ablation with the goal of minimizing future production
costs.
Western Uranium Corporation believes that its mineral resources
have a reasonable prospect for economic extraction, either with the utilization of Ablation or without it. However, the Company
has not yet been able to perform a Preliminary Economic Assessment (“PEA”). The inputs to the PEA are dependent
on the Ablation implementation approach. Under the CDPHE’s current determination, Ablation can be utilized under a
milling license, but the regulatory clarifications and a potential exemption create uncertainty. Accordingly, the Company has not
pursued an economic assessment.
The Company has planned for three potential scenarios for the
utilization of its Ablation technology: (a) utilization of Ablation at a mill site; (b) utilization of Ablation above ground at
the mine site; and (c) utilization of Ablation underground in the mine.
URANIUM MARKET OUTLOOK
World demand for clean, reliable, and affordable
electricity is growing. Given the expected construction of nuclear reactors and the expected growth of nuclear energy, we
believe that the future for uranium is positive. Further, recently announced production cuts by the largest uranium producer
in world and the largest uranium producer in North America have signaled a decrease in future supply. The section 232
petition that was filed in with the United States Department of Commerce further has the potential to increase U.S. domestic
uranium production and likely creating economic pricing levels for U.S. domestic producers. We believe these factors will
provide the price level increases needed to support the additional production and supply that will be required. Currently,
excess (secondary) supplies are being drawn down, and additional primary production will be needed to meet long-term
demand.
Once prices do rise, it still may be difficult for most suppliers
to respond in a timely manner, as it can require many years of permitting and development to bring new mines into production. These
lead times will put further upward pressure on prices.
We are at a competitive advantage, as our mining properties
are permitted and ready to be brought to production. Ablation gives us a further advantage, as we are able to begin to profitably
mine at much lower prices than our competitors.
Despite current market uncertainty and depressed prices, we
believe we have begun to see certain early signs of a market recovery. Japanese utilities have restarted 5 nuclear reactors and
have a further 21 in the process of restarting (according to the World Nuclear Association (“WNA”)). According to data
from the WNA, Chinese utilities continue to aggressively build new reactors and buy uranium, with the goal of having more nuclear
capacity than any country except the USA and France by 2020. In total, according to the WNA, there are about 50 new reactors under
construction in 13 countries and in all there are about 160 reactors on order or being planned, and over 300 more are proposed.
However in the short- and medium-terms, market challenges remain.
The world continues to be oversupplied with uranium, mainly due to large quantities of secondary uranium supplies, high levels
of excess inventories, premature reactor shutdowns, delays in new reactor construction, and decreased demand due to Japanese reactors
remaining offline for longer than expected. In addition, there is a great deal of uncertainty in uranium prices regarding the timing
and level of the recovery, as fundamental, political, technical, and other factors could cause prices to be significantly above
or below currently expected ranges.
OVERVIEW OF THE URANIUM INDUSTRY
Spot prices rose from $21.00 per pound in January 2005 to a
high of $136.00 per pound in June 2007 in anticipation of sharply higher projected demand as a result of a resurgence in nuclear
power and the depletion or unavailability of secondary supplies. Secondary supplies are inventories of uranium not publicly available
for sale, they are primarily held by utility companies and governments. The sharp price increase was driven in part by high levels
of buying by utility companies, which resulted in most utilities covering their requirements through 2009. A decrease in near-term
utility demand coupled with rising levels of supplies from producers and traders led to downward pressure on uranium prices since
the third quarter of 2007. A rebound in uranium prices in conjunction with a recovery in commodities in 2010 was curtailed by the
Fukushima disaster in Japan.
Since the Fukushima disaster in 2011, uranium prices entered
a steady decline until June 2014, when they rebounded slightly and peaked again in March 2015. After that peak, prices again began
to fall steadily reaching their lowest point in November 2016 before moving upward in 2017 and completing the year at higher year
over year levels.
The only significant commercial use for uranium is as a fuel
for nuclear power plants for the generation of electricity. According to the WNA, at the end of February 2018, there were 448 nuclear
reactors operable worldwide, with annual requirements of about 143.3 million pounds of uranium.
From the reports of leading investment banks, the macroeconomic
conditions driving uranium prices are as follows:
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WNA projects 14 reactor starts in 2018 in China, South
Korea, Russia, UAE, India, and Slovakia.
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The restart of Japan’s nuclear reactors – 21
nuclear reactors are in the process
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Decrease in primary supply due to leading producers shutting down mining operations that aren’t profitable at current
pricing levels (Kazatomprom and Cameco)
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Decreasing secondary supplies (excess reserves and supplies generally held by governments and utilities).
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Across the nine banks and analysts most active in the sector,
a term structure of rising uranium spot prices which are significantly above today’s prices are forecast almost across the
board from 2018 to 2022. A potential gradual rising in uranium prices is forecast from 2018 to 2022 primarily due to two factors.
The first is expected reduction in uranium production due to the currently low prices. The second is continued growth in nuclear
energy, fueled primarily by new plants with largest quantities over the next 5 years located in China, Russia, and India. Further
recommissioning of nuclear power plants in Japan will further add to the total. This should lead to excess reserves and inventories
drying up, causing multiple analysts to project a shortage, in the coming years, as historical contracts roll-off.
Based upon recent uranium pricing forecasts from leading bankers,
we believe that uranium prices will improve enough over the coming years for Western to initiate production.
Vanadium
With the exception of the Hansen/Taylor Deposit, most of the
Company’s mining assets, including the Sunday Mine Complex, contain vanadium as a co-product to uranium. The Company plans
to utilize this co-product to offset the cost of mining uranium through the sales of vanadium to third parties.
Conventional and new vanadium applications include steelmaking,
grid scale renewable energy storage, high performance batteries, and chemicals.
When a very small amount of vanadium is added to steel, high-strength
low-alloy vanadium steel is created while greatly reducing energy, shipping and production costs. And while steelmaking accounts
for roughly 90% of all vanadium currently consumed, it's estimated that vanadium is only used in about 9% of all steels today.
In a research piece, BMO Capital Markets has identified a structural
change in the vanadium markets. China, the largest vanadium producer in the world, has seen supply disrupted by environmental monitoring
and rules when domestic demand was increasing. During 2017, BMO observed ferrovanadium exports falling by 30% year over year and
projects that China will become a net importer of ferrovanadium. This potentially could be very positive for vanadium prices.
After steelmaking, the second largest market for vanadium is
that of catalysts and chemical applications. Significant new sources of demand for vanadium are also expected to originate from
vanadium redox flow batteries.
The current vanadium market price is $15.10 per pound as of
March 27, 2018 which is an increase from the December 31, 2017 price when the price was $9.70 per pound. Both are significantly
higher than the December 31, 2016 price of $5.00 per pound. As a result of structural changes in the market, several market participants
are reporting that vanadium demand exceeds vanadium supply and the market is in deficit.
Assuming the Company is able to monetize its vanadium resource
at current vanadium price levels, the Company would receive a proportionate increase in its co-credit thus effectively lowering
the processing of its uranium of approximately $108 per ton of uranium ore. This effective “credit” comes from the
ability for Western to mine vanadium as a by-product of uranium ore for no additional cost of the mining operation.
COMPETITION
There is global competition for uranium properties, capital,
customers and the employment and retention of qualified personnel. We compete with multiple exploration companies for both properties
as well as skilled personnel. In the production and marketing of uranium, there are a number of producing entities globally, some
of which are government controlled and several of which are significantly larger and better capitalized than we are. Several of
these organizations also have substantially greater financial, technical, manufacturing and distribution resources than we have.
Our future uranium production will also compete with uranium
from secondary supplies, including the sale of uranium inventory held by the U.S. Department of Energy. In addition, there are
numerous entities in the market that compete with us for properties and operate in situ recovery (“ISR”) facilities.
If we are unable to successfully compete for properties, capital, customers or employees or with alternative uranium sources, it
could have a material adverse effect on our results of operations.
With respect to sales of uranium, the Company competes primarily
based on price. We will market uranium to utilities and commodity brokers. We are in direct competition with supplies available
from various sources worldwide. We believe we compete with multiple operating uranium companies.
ENVIRONMENTAL CONSIDERATIONS AND PERMITTING
United States
Uranium extraction is regulated by the federal government, states
and, in some cases, by Indian tribes. Compliance with such regulation has a material effect on the economics of our operations
and the timing of project development. Our primary regulatory costs have been related to obtaining licenses and permits from federal
and state agencies before the commencement of production activities. The current environmental regulatory requirements for the
ISR industry are well established. Many ISR projects have gone a full life cycle without any significant environmental impact.
However, the process can make environmental permitting difficult and timing unpredictable. Western does not plan to utilize an
ISR mining process on its properties.
U.S. regulations pertaining to climate change continue to evolve
in both the U.S. and internationally. Other than our ongoing permitting process in regards to Ablation, we do not anticipate any
potential adverse impact from these regulations that would be unique to our operations.
Mining Permits are disclosed on a per mine
basis in the “Properties” section, below.
Reclamation and Restoration Costs and
Bonding Requirements
At the conclusion of conventional mining, a site is decommissioned
and reclaimed. Reclamation involves removing evidence of surface disturbance. The reclamation liabilities of the US mines are subject
to legal and regulatory requirements, and estimates of the costs of reclamation are reviewed periodically by the applicable regulatory
authorities. The reclamation liability represents the Company’s best estimate of the present value of future reclamation
costs in connection with the mineral properties. The Company determined the gross reclamation liabilities at December 31, 2017
of the mineral properties to be approximately $1,036,333.
The Company is required by State regulatory agencies to obtain
financial surety relating to certain of its future restoration and reclamation obligations. The Company has provided performance
bonds issued for the benefit of the Company in the amount of $1,036,410 to satisfy such regulatory requirements.
Ablation permitting
During 2016, Western submitted documentation to the CDPHE for
a determination ruling regarding the type of license which may be required for the application of Ablation at the Sunday Mine Complex
within the state of Colorado. During May and June of 2016, CDPHE held four public meetings in several cities in Colorado as part
of the process. On July 22, 2016 CDPHE closed the comment period. In connection with this matter, the CDPHE consulted with the
United States Nuclear Regulatory Commission (“NRC”). In response, the CDPHE received an advisory opinion dated October
16, 2016, which did not contain support for the NRC’s opinion and with which Western’s regulatory counsel does not
agree. NRC’s advisory opinion recommends that Ablation should be regulated as a milling operation, but did recognize that
there may be exemptions to certain milling regulatory requirements due to the benign nature of the non-uranium bearing sands produced
after Ablation is completed on uranium-bearing ores. On December 1, 2016, the CDPHE issued a determination that the proposed ablation
operations at the Sunday Mine must be regulated by the CDPHE through a milling license. The 2017 increase in the blended uranium/vanadium
price has brought the Company closer to production. Consequently in 2018, Western plans to continue to advance Ablation by seeking
a further regulatory determination from the CDPHE and/or the NRC. During 2017, the Company’s regulatory counsel prepared
significant documentation in preparation for a prospective submission.
ITEM 1A. RISK FACTORS
Risks Related to Our Business
Our business activities are subject to significant risks, including
those described below. Every investor or potential investor in our securities should carefully consider these risks. If any of
the described risks actually occurs, our business, financial position and results of operations could be materially adversely affected.
Such risks are not the only ones we face and additional risks and uncertainties not presently known to us or that we currently
deem immaterial may also affect our business.
We are not producing uranium at this time. As a result,
we currently have no sources of operating cash. If we cannot access additional sources of private or public capital, partner with
another company that has cash resources and/or find other means of generating revenue other than uranium production, we may not
be able to remain in business.
Until we begin uranium production, we have no way to generate
cash inflows unless we monetize certain of our assets or obtain additional financing. We can provide no assurance that our properties
will be placed into production or that we will be able to continue to find, develop, acquire and finance additional reserves. If
we cannot monetize certain existing assets, partner with another company that has cash resources, find other means of generating
revenue other than uranium production and/or access additional sources of private or public capital, we may not be able to remain
in business and our stockholders may lose their entire investment.
Our ability to function as an operating mining company will
be dependent on our ability to mine our properties at a profit sufficient to finance further mining activities and for the acquisition
and development of additional properties. The volatility of uranium prices makes long-range planning uncertain and raising capital
difficult.
Our ability to operate on a positive cash flow basis will be
dependent on mining sufficient quantities of uranium at a profit sufficient to finance our operations and for the acquisition and
development of additional mining properties. Any profit will necessarily be dependent upon, and affected by, the long and short
term market prices of uranium, which are subject to significant fluctuation. Uranium prices have been and will continue to be affected
by numerous factors beyond our control. These factors include the demand for nuclear power, political and economic conditions in
uranium producing and consuming countries, uranium supply from secondary sources and uranium production levels and costs of production.
A significant, sustained drop in uranium prices may make it impossible to operate our business at a level that will permit us to
cover our fixed costs or to remain in operation.
Evaluating our future performance may be difficult since
we have a limited financial and operating history, with significant negative cash flow and an accumulated deficit to date. Furthermore,
there is no assurance that we will be successful in securing any form of additional financing in the future, therefore substantial
doubt exists as to whether our cash resources and working capital will be sufficient to enable the Company to continue its operations
over the next twelve months. Our long-term success will depend ultimately on our ability to achieve and maintain profitability
and to develop positive cash flow from our mining activities.
As more fully described within this annual report, we acquired
our first mineral properties in November of 2014. To date, we have been acquiring additional mineral properties and raising capital.
We hold uranium projects in various stages of exploration in the States of Colorado and Utah.
As more fully described under “Liquidity and Capital Resources”
of Item 7. “Management’s Discussion and Analysis of Financial Condition and Result of Operations”, we have a
history of significant negative cash flow and net losses, with an accumulated deficit balance of $5.8 million and $4.1 million
at December 31, 2017 and December 31, 2016, respectively. We have been reliant on equity financings from the sale of our common
shares and on debt financing in order to fund our operations. We do not expect to achieve profitability or develop positive cash
flow from operations in the near term. As a result of our limited financial and operating history, including our significant negative
cash flow and net losses to date, it may be difficult to evaluate our future performance.
At December 31, 2017 and December 31, 2016, we had a working
capital deficit of $444,125 and $55,416, respectively. The continuation of the Company as a going concern is dependent upon our
ability to obtain adequate additional financing which we have successfully secured since inception. However, there is no assurance
that we will be successful in securing any form of additional financing in the future, therefore substantial doubt exists as to
whether our cash resources and working capital will be sufficient to enable the Company to continue its operations over the next
twelve months. The Company’s independent auditor has stated in its report that the consolidated financial statements for
the two years ended December 31, 2017 were prepared assuming that the Company would continue as a going concern. The accompanying
consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has
incurred continuing losses from operations and is dependent upon future sources of equity or debt financing in order to fund its
operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our reliance on equity and debt financings is expected to continue
for the foreseeable future, and their availability whenever such additional financing is required, will be dependent on many factors
beyond our control including, but not limited to, the market price of uranium, the continuing public support of nuclear power as
a viable source of electricity generation, the volatility in the global financial markets affecting our stock price and the status
of the worldwide economy, any one of which may cause significant challenges in our ability to access additional financing, including
access to the equity and credit markets. We may also be required to seek other forms of financing, such as asset divestitures or
joint venture arrangements to continue advancing our uranium projects, which would depend entirely on finding a suitable third
party willing to enter into such an arrangement, typically involving an assignment of a percentage interest in the mineral project.
Our long-term success, including the recoverability of the carrying
values of our assets and our ability to acquire additional uranium projects and continue with exploration and pre-extraction activities
and mining activities on our existing uranium projects, will depend ultimately on our ability to achieve and maintain profitability
and positive cash flow from our operations by establishing ore bodies that contain commercially recoverable uranium and to develop
these into profitable mining activities. The economic viability of our mining activities has many risks and uncertainties. These
include, but are not limited to: (i) a significant, prolonged decrease in the market price of uranium; (ii) difficulty in marketing
and/or selling uranium concentrates; (iii) significantly higher than expected capital costs to construct the mine and/or processing
plant; (iv) significantly higher than expected extraction costs; (v) significantly lower than expected uranium extraction; (vi)
significant delays, reductions or stoppages of uranium extraction activities; and (vi) the introduction of significantly more stringent
regulatory laws and regulations. Our mining activities may change as a result of any one or more of these risks and uncertainties
and there is no assurance that any ore body that we extract mineralized materials from will result in achieving and maintaining
profitability and developing positive cash flow.
Our operations are capital intensive, and we will require
significant additional financing to acquire additional uranium projects, continue with our exploration and begin pre-extraction
activities on our existing uranium projects.
Our operations are capital intensive and future capital expenditures
are expected to be substantial. We will require significant additional financing to fund our operations, including acquiring additional
uranium projects, continuing with our exploration and beginning pre-extraction activities which include assaying, drilling, geological
and geochemical analysis and mine construction costs. In the absence of such additional financing, we would not be able to fund
our operations, including continuing with our exploration and pre-extraction activities, which may result in delays, curtailment
or abandonment of any one or all of our uranium projects.
Uranium exploration and pre-extraction programs and mining
activities are inherently subject to numerous significant risks and uncertainties, and actual results may differ significantly
from expectations or anticipated amounts. Furthermore, exploration programs conducted on our uranium projects may not result in
the establishment of ore bodies that contain commercially recoverable uranium.
Uranium exploration and pre-extraction programs and mining activities
are inherently subject to numerous significant risks and uncertainties, many beyond our control, including, but not limited to:
(i) unanticipated ground and water conditions and adverse claims to water rights; (ii) unusual or unexpected geological formations;
(iii) metallurgical and other processing problems; (iv) the occurrence of unusual weather or operating conditions and other force
majeure events; (v) lower than expected ore grades; (vi) industrial accidents; (vii) delays in the receipt of or failure to receive
necessary government permits; (viii) delays in transportation; (ix) availability of contractors and labor; (x) government permit
restrictions and regulation restrictions; (xi) unavailability of materials and equipment; and (xii) the failure of equipment or
processes to operate in accordance with specifications or expectations. These risks and uncertainties could result in: delays,
reductions or stoppages in our mining activities; increased capital and/or extraction costs; damage to, or destruction of, our
mineral projects, extraction facilities or other properties; personal injuries; environmental damage; monetary losses; and legal
claims.
Success in uranium exploration is dependent on many factors,
including, without limitation, the experience and capabilities of a company’s management, the availability of geological
expertise and the availability of sufficient funds to conduct the exploration program. Even if an exploration program is successful
and commercially recoverable uranium is established, it may take a number of years from the initial phases of drilling and identification
of the mineralization until extraction is possible, during which time the economic feasibility of extraction may change such that
the uranium ceases to be economically recoverable. Uranium exploration is frequently non-productive due, for example, to poor exploration
results or the inability to establish ore bodies that contain commercially recoverable uranium, in which case the uranium project
may be abandoned and written-off. Furthermore, we will not be able to benefit from our exploration efforts and recover the expenditures
that we incur on our exploration programs if we do not establish ore bodies that contain commercially recoverable uranium and develop
these uranium projects into profitable mining activities, and there is no assurance that we will be successful in doing so for
any of our uranium projects.
Whether an ore body contains commercially recoverable uranium
depends on many factors including, without limitation: (i) the particular attributes, including material changes to those attributes,
of the ore body such as size, grade, recovery rates and proximity to infrastructure; (ii) the market price of uranium, which may
be volatile; and (iii) government regulations and regulatory requirements including, without limitation, those relating to environmental
protection, permitting and land use, taxes, land tenure and transportation.
We have established the existence of mineralized materials for
uranium properties. We have not established proven or probable reserves, as defined by the SEC under Industry Guide 7, through
the completion of a “final” or “bankable” feasibility study for any of our uranium properties. Furthermore,
we have no current plans to establish proven or probable reserves for any of our uranium properties as it doesn’t serve a
business purpose at the present time.
We may not be able to realize anticipated benefits of
the Ablation process due to uncertainties associated with that process.
In order to utilize Ablation technology to process uranium/vanadium
bearing ore there are uncertainties that must be overcome which include the uncertainty as to the evolution of the regulatory framework
and technological considerations. Either may cause delays in start-up, and/or increase costs, and may preclude the realization
of the anticipated benefits of the Ablation process. Use of Ablation represents an additional processing step, requiring additional
equipment, support, material handling and a potential increase in water usage requirements.
We do not insure against all of the risks we face in our
operations.
In general, where coverage is available and not prohibitively
expensive relative to the perceived risk, we will maintain insurance against such risk, subject to exclusions and limitations.
We currently maintain insurance against certain risks including securities and general commercial liability claims and certain
physical assets used in our operations, subject to exclusions and limitations; however, we do not maintain insurance to cover all
of the potential risks and hazards associated with our operations. We may be subject to liability for environmental, pollution
or other hazards associated with our exploration, pre-extraction and extraction activities, which we may not be insured against,
which may exceed the limits of our insurance coverage or which we may elect not to insure against because of high premiums or other
reasons. Furthermore, we cannot provide assurance that any insurance coverage we currently have will continue to be available at
reasonable premiums or that such insurance will adequately cover any resulting liability.
Our inability to obtain financial surety would threaten
our ability to continue in business.
Future financial surety requirements to comply with federal
and state environmental and remediation requirements and to secure necessary licenses and approvals will increase significantly
as future development and production occurs at certain of our sites in the United States. The amount of the financial surety for
each producing property is subject to annual review and revision by regulators. We expect that the issuer of the financial surety
instruments will require us to provide cash collateral for a significant amount of the face amount of the bond to secure the obligation.
In the event we are not able to raise, secure or generate sufficient funds necessary to satisfy these requirements, we will be
unable to develop our sites and bring them into production, which inability will have a material adverse impact on our business
and may negatively affect our ability to continue to operate.
Acquisitions that we may make from time to time could
have an adverse impact on us.
From time to time, we examine opportunities to acquire additional
mining assets and businesses. Any acquisition that we may choose to complete may be of a significant size, may change the scale
of our business and operations, and may expose us to new geographic, political, operating, financial and geological risks. Our
success in our acquisition activities depends on our ability to identify suitable acquisition candidates, negotiate acceptable
terms for any such acquisition, and integrate the acquired operations successfully with those of our Company. Any acquisitions
would be accompanied by risks which could have a material adverse effect on our business. For example, there may be a significant
change in commodity prices after we have committed to complete the transaction and established the purchase price or exchange ratio;
a material ore body may prove to be below expectations; we may have difficulty integrating and assimilating the operations and
personnel of any acquired companies, realizing anticipated synergies and maximizing the financial and strategic position of the
combined enterprise, and maintaining uniform standards, policies and controls across the organization; the integration of the acquired
business or assets may disrupt our ongoing business and our relationships with employees, customers, suppliers and contractors;
and the acquired business or assets may have unknown liabilities which may be significant. In the event that we choose to raise
debt capital to finance any such acquisition, our leverage will be increased. If we choose to use equity as consideration for such
acquisition, existing shareholders may suffer dilution. Alternatively, we may choose to finance any such acquisition with our existing
resources. There can be no assurance that we would be successful in overcoming these risks or any other problems encountered in
connection with such acquisitions.
The uranium industry is subject to numerous stringent
laws, regulations and standards, including environmental protection laws and regulations. If any changes occur that would make
these laws, regulations and standards more stringent, it may require capital outlays in excess of those anticipated or cause substantial
delays, which would have a material adverse effect on our operations.
Uranium exploration and pre-extraction programs and mining activities
are subject to numerous stringent laws, regulations and standards at the federal, state, and local levels governing permitting,
pre-extraction, extraction, exports, taxes, labor standards, occupational health, waste disposal, protection and reclamation of
the environment, protection of endangered and protected species, mine safety, hazardous substances and other matters. Our compliance
with these requirements requires significant financial and personnel resources.
The laws, regulations, policies or current administrative practices
of any government body, organization or regulatory agency in the United States or any other applicable jurisdiction, may change
or be applied or interpreted in a manner which may also have a material adverse effect on our operations. The actions, policies
or regulations, or changes thereto, of any government body or regulatory agency or special interest group, may also have a material
adverse effect on our operations.
Uranium exploration and pre-extraction programs and mining activities
are subject to stringent environmental protection laws and regulations at the federal, state, and local levels. These laws and
regulations, which include permitting and reclamation requirements, regulate emissions, water storage and discharges and disposal
of hazardous wastes. Uranium mining activities are also subject to laws and regulations which seek to maintain health and safety
standards by regulating the design and use of mining methods. Various permits from governmental and regulatory bodies are required
for mining to commence or continue, and no assurance can be provided that required permits will be received in a timely manner.
Our compliance costs including the posting of surety bonds associated
with environmental protection laws and regulations and health and safety standards have been significant to date, and are expected
to increase in scale and scope as we expand our operations in the future. Furthermore, environmental protection laws and regulations
may become more stringent in the future, and compliance with such changes may require capital outlays in excess of those anticipated
or cause substantial delays, which would have a material adverse effect on our operations.
To the best of our knowledge, our operations are in compliance,
in all material respects, with all applicable laws, regulations and standards. We may not be able or may elect not to insure against
the risk of liability for violations of such laws, regulations and standards, due to high insurance premiums or other reasons.
Where coverage is available and not prohibitively expensive relative to the perceived risk, we will maintain insurance against
such risk, subject to exclusions and limitations. However, we cannot provide any assurance that such insurance will continue to
be available at reasonable premiums or that such insurance will be adequate to cover any resulting liability.
We may not be able to obtain, maintain or amend rights,
authorizations, licenses, permits or consents required for our operations.
Our exploration and mining activities are dependent upon the
grant of appropriate rights, authorizations, licenses, permits and consents, as well as continuation and amendment of these rights,
authorizations, licenses, permits and consents already granted, which may be granted for a defined period of time, or may not be
granted or may be withdrawn or made subject to limitations. There can be no assurance that all necessary rights, authorizations,
licenses, permits and consents will be granted to us, or that authorizations, licenses, permits and consents already granted will
not be withdrawn or made subject to limitations.
In July 2015, the Company began a licensing process for its
Ablation technology. Western continued to advance through the process in 2016, as the Company participated in public hearings
and provided additional technical data to the CDPHE. On October 16, 2016, the NRC issued an advisory opinion letter to CDPHE recommending
that Ablation should be regulated as a milling operation, On December 1, 2016, the CDPHE issued a determination that the proposed
ablation operations at the Sunday Mine must be regulated by the CDPHE through a milling license. Ultimately, this determination
provided a framework which allows the utilization of this new technology, however the current regulatory framework doesn’t
currently allow application under the optimal cost saving configuration and the regulatory framework could change in the future
in ways not anticipated by the Company.
Closure and remediation costs for environmental liabilities
may exceed the provisions we have made.
Natural resource companies are required to close their operations
and rehabilitate the lands in accordance with a variety of environmental laws and regulations. Estimates of the total ultimate
closure and rehabilitation costs for uranium operations are significant and based principally on current legal and regulatory requirements
and closure plans that may change materially. Any underestimated or unanticipated rehabilitation costs could materially affect
our financial position, results of operations and cash flows. Environmental liabilities are accrued when they become known, are
probable and can be reasonably estimated. Whenever a previously unrecognized remediation liability becomes known, or a previously
estimated reclamation cost is increased, the amount of that liability and additional cost will be recorded at that time and could
materially reduce our consolidated net income in the related period.
The laws and regulations governing closure and remediation in
a particular jurisdiction are subject to review at any time and may be amended to impose additional requirements and conditions
which may cause our provisions for environmental liabilities to be underestimated and could materially affect our financial position
or results of operations.
Major nuclear incidents may have adverse effects on the
nuclear and uranium industries.
The nuclear incident that occurred in Japan in March 2011 had
significant and adverse effects on both the nuclear and uranium industries. If another nuclear incident were to occur, it may have
further adverse effects for both industries. Public opinion of nuclear power as a source of electricity generation may be adversely
affected, which may cause governments of certain countries to further increase regulation for the nuclear industry, reduce or abandon
current reliance on nuclear power or reduce or abandon existing plans for nuclear power expansion. Any one of these occurrences
has the potential to reduce current and/or future demand for nuclear power, resulting in lower demand for uranium and lower market
prices for uranium, adversely affecting the Company’s operations and prospects. Furthermore, the growth of the nuclear and
uranium industries is dependent on continuing and growing public support of nuclear power as a viable source of electricity generation.
The marketability of uranium concentrates will be affected
by numerous factors beyond our control which may result in our inability to receive an adequate return on our invested capital.
The marketability of uranium concentrates extracted by us will
be affected by numerous factors beyond our control. These factors include macroeconomic factors, fluctuations in the market price
of uranium, governmental regulations, land tenure and use, regulations concerning the importing and exporting of uranium and environmental
protection regulations. The future effects of these factors cannot be accurately predicted, but any one or a combination of these
factors may result in our inability to receive an adequate return on our invested capital.
The only significant market for uranium is nuclear power
plants world-wide, and there are a limited number of customers.
We are dependent on a limited number of electric utilities that
buy uranium for nuclear power plants. Because of the limited market for uranium, a reduction in purchases of newly produced uranium
by electric utilities for any reason (such as plant closings) would adversely affect the viability of our business.
The price of alternative energy sources affects the demand
for and price of uranium.
The attractiveness of uranium as an alternative fuel to generate
electricity may be dependent on the relative prices of oil, gas, coal and hydro-electricity and the possibility of developing other
low-cost sources of energy. If the prices of alternative energy sources decrease or new low-cost alternative energy sources are
developed, the demand for uranium could decrease, which may result in a decrease in the price of uranium.
The title to our mineral property interests may be challenged.
Although we have taken reasonable measures to ensure proper
title to our interests in mineral properties and other assets, there is no guarantee that the title to any of such interests will
not be challenged. No assurance can be given that we will be able to secure the grant or the renewal of existing mineral rights
and tenures on terms satisfactory to us, or that governments in the jurisdictions in which we operate will not revoke or significantly
alter such rights or tenures or that such rights or tenures will not be challenged or impugned by third parties, including local
governments, aboriginal peoples or other claimants. Our mineral properties may be subject to prior unregistered agreements, transfers
or claims, and title may be affected by, among other things, undetected defects. A successful challenge to the precise area and
location of our claims could result in us being unable to operate on our properties as permitted or being unable to enforce our
rights with respect to our properties.
Due to the nature of our business, we may be subject to
legal proceedings which may divert management’s time and attention from our business and result in substantial damage awards.
Due to the nature of our business, we may be subject to numerous
regulatory investigations, securities claims, civil claims, lawsuits and other proceedings in the ordinary course of our business.
The outcome of these lawsuits is uncertain and subject to inherent uncertainties, and the actual costs to be incurred will depend
upon many unknown factors. We may be forced to expend significant resources in the defense of these suits, and we may not prevail.
Defending against these and other lawsuits in the future may not only require us to incur significant legal fees and expenses,
but may become time-consuming for us and detract from our ability to fully focus our internal resources on our business activities.
The results of any legal proceeding cannot be predicted with certainty due to the uncertainty inherent in litigation, the difficulty
of predicting decisions of regulators, judges and juries and the possibility that decisions may be reversed on appeal. There can
be no assurances that these matters will not have a material adverse effect on our business, financial position or operating results.
Competition from better-capitalized companies affects
prices and our ability to acquire both properties and personnel.
There is global competition for uranium properties, capital,
customers and the employment and retention of qualified personnel. In the production and marketing of uranium, there are a number
of producing entities, some of which are government controlled and all of which are significantly larger and better capitalized
than we are. Many of these organizations also have substantially greater financial, technical, manufacturing and distribution resources
than we have.
Our future uranium production will also compete with uranium
recovered from the de-enrichment of highly enriched uranium obtained from the dismantlement of United States and Russian nuclear
weapons and imports to the United States of uranium from the former Soviet Union and from the sale of uranium inventory held by
the United States Department of Energy. In addition, there are numerous entities in the market that compete with us for properties
and are attempting to become licensed to operate ISR and/or underground mining facilities. If we are unable to successfully compete
for properties, capital, customers or employees or with alternative uranium sources, it could have a materially adverse effect
on our results of operations.
Because we have limited capital, inherent mining risks
pose a significant threat to us compared with our larger competitors.
Because we have limited capital we may be unable to withstand
significant losses that can result from inherent risks associated with mining, including environmental hazards, industrial accidents,
flooding, earthquake, interruptions due to weather conditions and other acts of nature which larger competitors could withstand.
Such risks could result in damage to or destruction of our infrastructure and production facilities, as well as to adjacent properties,
personal injury, environmental damage and processing and production delays, causing monetary losses and possible legal liability.
Our business could be harmed if we lose the services of our key personnel.
Our business and mineral exploration programs depend upon our
ability to employ the services of geologists, engineers and other experts. In operating our business and in order to continue our
programs, we compete for the services of professionals with other mineral exploration companies and businesses. In addition, several
entities have expressed an interest in hiring certain of our employees. Our ability to maintain and expand our business and continue
our exploration programs may be impaired if we are unable to continue to employ or engage those parties currently providing services
and expertise to us or identify and engage other qualified personnel to do so in their place. To retain key employees, we may face
increased compensation costs, including potential new stock incentive grants and there can be no assurance that the incentive measures
we implement will be successful in helping us retain our key personnel.
If we fail to maintain proper and effective internal controls,
our ability to produce accurate and timely consolidated financial statements could be impaired, which could harm our operating
results, our ability to operate our business and investors’ views of us.
Ensuring that we have adequate internal financial and accounting
controls and procedures in place so that we can produce accurate consolidated financial statements on a timely basis is a costly
and time-consuming effort that will need to be evaluated frequently. Section 404 of the Sarbanes-Oxley Act requires public companies
to conduct an annual review and evaluation of their internal controls. The Company is in the process of reviewing its internal
control over financial reporting in the interest of complying with Section 404 of the Sarbanes-Oxley Act. Our failure to maintain
the effectiveness of our internal controls in accordance with the requirements of the Sarbanes-Oxley Act could have a material
adverse effect on our business. We could lose investor confidence in the accuracy and completeness of our financial reports, which
could have an adverse effect on the price of our common shares.
The Company may be subject to certain tax consequences
in its business, which may increase the cost of doing business.
The Company may not be able to structure its acquisitions to
result in tax-free treatment for the companies or their stockholders, which could deter third parties from entering into certain
business combinations with the Company or result in being taxed on consideration received in a transaction.
Risks Related to Our Stock
If we are unable to raise additional capital, our business
may fail and stockholders may lose their entire investment.
We had $427,020 and $791,814 in cash at December 31, 2017 and
December 31, 2016, respectively. There can be no assurance that we will be able to obtain additional capital after we exhaust our
current cash. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance
of such securities would likely result in substantial dilution to existing stockholders. If we borrow money, we will have to pay
interest and may also have to agree to restrictions that limit our operating flexibility.
If additional capital is not available in sufficient amounts
or on a timely basis, we will experience liquidity problems, and we could face the need to significantly curtail current operations,
change our planned business strategies and pursue other remedial measures. Any curtailment of business operations would have a
material negative effect on operating results, the value of our outstanding stock is likely to fall, and our business may fail,
causing our stockholders to lose their entire investment.
Shareholders could be diluted if we were to use common
shares to raise capital.
We may need to seek additional capital to carry our business
plan. This financing could involve one or more types of securities including common shares, convertible debt or warrants to acquire
common shares. These securities could be issued at or below the then prevailing market price for our common shares. Any issuance
of additional common shares could be dilutive to existing stockholders and could adversely affect the market price of our common
shares.
The Company’s common shares may be traded infrequently
and in low volumes, which may negatively affect the ability to sell shares.
The Company’s common shares may trade infrequently and
in low volumes on both the CSE and OTCQX, meaning that the number of persons interested in purchasing our common shares at or near
bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors,
including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors
and others in the investment community who can generate or influence sales volume, and that even if we came to the attention of
such institutionally oriented persons, they tend to be risk-averse in this environment and would be reluctant to follow an early
stage company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.
As a consequence, there may be periods of several days or more when trading activity in the Company’s shares is minimal or
non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support
continuous sales without an adverse effect on share price. The Company cannot give you any assurance that a broader
or more active public trading market for our common shares will develop or be sustained. Due to these conditions, we
can give you no assurance that you will be able to sell your shares at or near bid prices or at all if you need money or otherwise
desire to liquidate your shares. Further, institutional and other investors may have investment guidelines that restrict
or prohibit investing in securities traded in the over-the-counter market. These factors may have an adverse impact
on the trading and price of our securities, and could even result in the loss by investors of all or part of their investment.
The Company’s common share price may be volatile.
The future trading price of the Company’s common shares
may be volatile and may fluctuate substantially. The price of the common shares may be higher or lower than the price you pay for
your shares, depending on many factors, some of which are beyond the Company’s control and may not be directly related to
its operating performance. These factors include the following:
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price and volume fluctuations in the overall stock market from time to time;
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significant volatility in the market price and trading volume of securities of mineral exploration and mining companies;
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changes in government regulations or regulatory policies with respect to mineral exploration and mining companies or in the status of our regulatory approvals;
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actual or anticipated changes in earnings or fluctuations in operating results;
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announcements by us or by our competitors of acquisitions or of new products, commercial relationships or capital commitments;
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disruption to our operations or those of other sources critical to our operations;
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the emergence of new competitors;
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commencement of, or our involvement in, litigation;
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dilutive issuances of our common shares or the incurrence of additional debt;
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adoption of new or different accounting standards;
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general economic conditions and trends and slow or negative growth of related markets;
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loss of a major funding source; or
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departures of key personnel.
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Due to the continued potential volatility of the stock price,
the Company may be the target of securities litigation in the future. Securities litigation could result in substantial costs and
divert management’s attention and resources from the business.
The sale of shares by our directors and officers may adversely
affect the market price for our shares.
Sales of significant amounts of common shares held by our officers
and directors, or the prospect of these sales, could adversely affect the market price of our common shares. Management’s
stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us,
which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
We have never paid or declared any dividends on our common
shares.
We have never paid or declared any dividends on our common shares
or preferred stock. Likewise, we do not anticipate paying, in the near future, dividends or distributions on our common shares.
Any future dividends on common shares will be declared at the discretion of our board of directors and will depend, among other
things, on our earnings, our financial requirements for future operations and growth, and other facts as we may then deem appropriate.
Our Chief Executive Officer and one of our directors are
also our two largest stockholders, and as a result they can exert control over us and have actual or potential interests that may
diverge from yours.
George Glasier, our CEO, and Russell Fryer, one of our Directors,
beneficially own, in the aggregate, about 42% of our common shares. As a result, these stockholders, acting together, will be able
to influence many matters requiring stockholder approval, including the election of directors and approval of mergers and other
significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing or deterring a
change in control, and could deprive our stockholders of an opportunity to receive a premium for their common shares as part of
a sale of our company and may affect the market price of our stock.
Furthermore, Mr. Glasier and Mr. Fryer may have interests that
diverge from those of other holders of our common shares. As a result, Mr. Glasier and Mr. Fryer may vote the shares they own or
control or otherwise cause us to take actions that may conflict with your best interests as a stockholder, which could adversely
affect our results of operations and the trading price of our common shares. Through this control, Mr. Glasier and Mr. Fryer can
control our management, affairs and all matters requiring stockholder approval, including the approval of significant corporate
transactions, a sale of our company, decisions about our capital structure and the composition of our Board of Directors.
ITEM 1B. UNRESOLVED STAFF
COMMENTS
None
ITEM 2. PROPERTIES
Company headquarters is maintained through a lease at 330 Bay
Street, Suite 1400, Toronto, Ontario, Canada M5H 2S8.
An operations facility is rented at 31617 Hwy 90 Road, Nucla,
Colorado, USA 81424 which houses the ablation units and an office.
*
Owned
by Pinon Ridge Corporation (not owned by Western Uranium Corporation)
**Owned by Energy Fuels Resources Corporation (not
owned by Western Uranium Corporation)
*** Effective September 1, 2017, the state lease
fees were due and Western elected not to pay those fees thereby surrendering the resource to the state of Utah.
PROPERTIES
We have no proven or probable reserves. However, as a company
incorporated in Canada we have provided below resources qualifying under National Instrument 43-101, for our Sunday Mines Complex
and our San Rafael Uranium Project.
On September 16, 2015, in connection with the Black Range Transaction,
the Company acquired additional mineral properties. The mining assets acquired through Black Range included assets in the states
of Colorado, Wyoming and Alaska. None of these mining assets are operational at this time. As these properties have not formally
established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized material
can be economically extracted as originally planned and anticipated.
The Company’s mining properties acquired on August 18,
2014 that the Company retains as of December 31, 2017, include: San Rafael Uranium Project located in Emery County, Utah; The Sunday
Mine Complex located in western San Miguel County, Colorado; The Van 4 Mine located in western Montrose County, Colorado; The Sage
Mine project located in San Juan County, Utah, and San Miguel County, Colorado USA, and the Dunn Project located in San Juan County,
Utah.
The Company’s mining properties acquired on September
16, 2015 that the Company retains as of December 31, 2017, include Hansen, North Hansen, High Park, Hansen Picnic Tree, and Taylor
Ranch, located in Fremont and Teller Counties, Colorado. The Company also acquired the Keota project located in Weld County, Colorado,
and Ferris Haggerty located in Carbon County, Wyoming.
The near term plan for the Company’s resources is to mine
initially at the Sunday Complex. The Sunday Mine Complex is an advanced stage property with a significant drilling and production
history. Mining and drilling occurred contemporaneously from the 1950’s through the mid 1980’s. From the 1980’s
to the present, mining and drilling occurred only sporadically, typically when uranium or vanadium prices were high. The last mining
interval was from 2006 to 2009, and based on the available records, only in 2009 did any drilling take place since mid-1980. Past
operators have generated abundant geologic and mining data and there are open faces underground that show mineralized zones.
Near term exploration is not needed because the underground
infrastructure has been already developed.
The Property
The Sunday Mine Complex
is located in western San Miguel County and is part of the Uravan Mineral Belt. The property is situated 25 miles north of Dove
Creek, Colorado, on the north flake of Disappointment Valley and portions of Big Gypsum Valley. Energy Fuels Resources (USA) Inc.
(“EFR”) acquired the property in June 2012 from Denison Mines Corp. The complex consists of five individual mines with
declines located along a two mile stretch of the southern side of Big Gypsum Valley, with underground workings extending generally
south, with associated vents and surface facilities. The mines are, from east to west: Sunday, Carnation, Saint Jude, West Sunday,
and Topaz. The mines were last actively mined from 2007 to 2009.
The property consists of
221 unpatented claims on public land managed by the U.S. Bureau of Land Management
(“BLM”) Tres Rios Field Office, covering approximately 3,800 acres. The area covers parts of
sections 10, 13, 14, 15, 23, 24, and 26 T44N R18W, and sections 18, 19, 20, and
30 T44N R17W. Total annual BLM claim maintenance fee are approximately $34,255 due September 1st each
year. The Sunday Complex is approximately 75 miles from the White Mesa Mill and 50 miles from the proposed
Piñon Ridge Mill in Paradox Valley. The property has access to grid power and has a natural underground source of
water due to an aquifer. As a mine that has produced in the recent past, the Sunday Mine Complex has a robust
infrastructure. The roads are all-weather, electric power is grid-tied, surface facility structures that meet Colorado State
standards exist, and water is present. Neither exploration plans nor a mining plan have been prepared for the project and
each of the five associated mining permits are in Temporary Cessation status.
GMG, Sunshine, and Patsun claims
(totaling twenty claims in the northeast portion of the property) carry a 12.5% royalty on all ore produced.
Accessibility
The property is best accessed from
Colorado. Access from Colorado is via State Highway 141 east out of Naturita, CO for about 3.7 mi (6 km) until the 141/145 Highway
junction, then about 22.4 mi (36 km) south on Hwy 141, then about 6.2 mi (10 km) northwest on County Road 20R (Gypsum Valley Road).
The State Highway 141 is a paved all-weather road and the County Road 20R is a gravel road passable in all but the worst weather.
History
The Sunday Mine Complex consists of
six different mines. These are the Topaz, West Sunday, Sunday, St. Jude, Carnation, and the GMG. The mines have had a number of
owners and operators. Maps and documents made available to the author show that the following companies have been involved in the
all or parts of the property prior to WUC acquisition of the SMC in April 2014: Matterhorn Mining (1950’s-1960’s, Climax
Uranium 1960’s, Union Carbide Corporation (UCC) 1970’s-1980’s, Atlas Minerals (1980’s), Energy Fuels Nuclear
(early 1990’s), International Uranium Corp. (1990’s-2000’s), Denison Mines (USA) (2000’s), and Energy Fuels
(2010’s). The documents are incomplete as so this list may be as well. Since UCC days, the ownership has been clear. In 1983
Union Carbide transferred its mineral interests to UMETCO, a wholly-owned subsidiary. For the sake of consistency, the name Union
Carbide will be used even if technically the ownership was UMETCO at the time.
Records made available to the author
by WUC and a search of public documents on-line indicates exploration drilling starting on the property in the early 1950’s.
Two Defense Minerals Exploration Administration (DMEA) reports, one on the Sunday area and the other on the Topaz area, indicated
some drilling and minor surface extraction had occurred by the mid 1950’s (DMEA, 1953 & 1956). Additionally, historic
maps of the area show the Sunday mines in operation in the 1950’s (Denison Mines, 2008).
The records & anecdotal evidence
indicate that from the mid-1960’s until the early 1980’s, the SMC produced material from relatively steady ongoing
mining operations. These ceased in 1984 when Union Carbide closed their Uravan mill. Since then, the property has been idle, with
the exception of brief periods in the late 1980’s when UCC mined for a short time during a spike in vanadium prices, in the
mid-1990’s with International Uranium Corporation and another one in 2006-2009 when Denison Mines extracted ore from the
mine. During all three periods, the ore was processed at the White Mesa Mill located just south of Blanding, UT.
Exploration and development drilling
on the property was contemporaneous with the mining. The available database records show that at least 1,419 holes have been drilled
on the property. This is an incomplete list, as an examination of the available maps and cross-sections show a number of holes
that are not in the database. A best estimate for total distance drilled is about 850,100 ft (259,175 m). Anecdotal evidence and
some maps also give evidence that underground long holes (test holes drilled from the mine workings anywhere from 50 ft (15 m)
to 300 ft (91 m) long) were used extensively throughout the mined areas.
The 2-D digitized mine workings, done
by Denison Mines show extensive stopping and drifting within parts of the SMC. Generational mime maps indicate that more mine workings
exist than are shown in the digital database. A very conservative rough estimate of the linear mine workings based on the digital
database is in excess of 50,000 ft (15,244 m) with many stopes. Figure 6.2.1 shows the known drill hole and mine working locations.
Based on the records and on field inspection,
it is evident that the Property has a significant history of drill exploration and mine development.
Anthony R. Adkins, P. Geol., LLC was
commissioned by Western Uranium to prepare an Independent Technical Report compliant with the Canadian National Instrument 43-101
on the Sunday Mine Complex Uranium (SMC) Project, an advanced-stage uranium property. The report was finalized on July 7, 2015
and filed on sedar.com on July 16, 2015.
The report states that the Sunday Mine Complex has Measured
and Indicated Resources of 203,217 tons grading at 0.25% U3O8 containing 1,007,803 lbs U3O8 and Inferred Resources of 264,604 tons
grading at 0.36% containing 1,906,081 lbs U3O8. This Technical Report resource is an historic estimate under NI 43-101. The historic
mineral resource estimate was calculated by the area of influence method, which is a common way for resources in the Uravan Mineral
Belt to be estimated.
The Sunday Mine Complex Technical Report filed by Western Uranium
estimates mineral resources and not reserves. That report does not use categories other than “mineral resources” and
“mineral reserves”, and the Sunday Mine Complex property was reported as having no reserve quality mineralization.
There is no more recent or available data on the Sunday Mine Complex project resource than that of the Western Uranium Technical
Report from 2015. In order to disclose the historic resource as current, the Company needs to have completed and filed an NI 43-101
technical report on sedar.com which includes discussion on the reasonable prospect for economic extraction of the mineral resource.
A qualified person (as understood under NI 43-101) has not done sufficient work to classify the historical estimate as current
mineral resources or mineral reserves, and the Company is not treating the historical estimate as current mineral resources or
mineral reserves. In order to upgrade or verify the historical estimate provided by the Western Uranium Technical Report, the Company
would have to engage a qualified person to, among other things, take account of any exploration or other work on the Sunday Mine
Complex since the date of the historical estimate and otherwise produce a report under NI 43-101.
Project Geology
Geologically, the main hosts for uranium-vanadium mineralization
in the Sunday Mine Complex are fluvial sandstone beds assigned to the upper part of the Salt Wash Member of the Jurassic Morrison
Formation, with minor production coming from conglomeratic sandstones assigned to the lower portion of the Brushy Basin Member
of the Morrison Formation. Mineralization from both members is present at the property, with the mine production coming from the
Salt Wash Member. Beds generally strike NW-SE and dip SW, with some exceptions within fault bounded blocks adjacent to Big Gypsum
Valley.
Restoration and Reclamation
Each of the mines are permitted
separately with the DRMS and are considered to be in temporary cessation status. The mines and their permitted acres and reclamation
bonds are, from east to west, the Sunday (60 acres, $297,926), Carnation (9.8 acres, $22,468), Saint Jude (9.8 acres,
$47,700), West Sunday (12.1 acres, $85,036), and Topaz (30 acres, $94,791).
Permitting Status
The air permits for the site are currently
being renewed with APCD. A Stormwater permit is in place with the WQCD and a Stormwater Management Plan is
in effect. However, a mine water treatment plant will need to be permitted for treating mine water, as there is currently 55 million
gallons of water in the lower portion of the mine where most of the remaining resource is located. This will require a discharge
permit with the DWQC and revisions to the Plan of Operations, EPP, and one of the DRMS mine permits. Special Use Permits are also
in place with San Miguel County, which mainly address road maintenance and transportation issues with some limitations in effect
on when and how many trucks may be used for ore haulage to the mill.
Major permits
currently in place at the Sunday Complex include:
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Sunday 112d Mine Permit M-1977-285 (DRMS)
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St. Jude 110d Mine Permit M-1978-039-HR (DRMS)
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West Sunday 112d Mine Permit M-1981-021 (DRMS)
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Carnation 110d Mine Permit M-1977-416 (DRMS)
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Topaz 112d Mine Permit M-1980-055-HR (DRMS)
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West Sunday Plan of Operations COC 52049 (BLM)
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Sunday, St. Jude and Carnation Plan of Operations COC-53227 (BLM)
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Resolution #1997-18 Mine Permit (San Miguel County)
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Resolution 2007-34 Topaz and Sunday Expansion (San Miguel County)
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Resolution 2008-41 Increased Ore Haulage (San Miguel County)
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Road & Bridge Special Construction Permit (SCP) 06-14 (San Miguel County)
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The Property
The San Rafael Uranium Project land position is comprised of
a contiguous claim block covered by 136 BM unpatented federal lode mining claims and 10 Hollie unpatented federal lode mining claims.
The San Rafael Project is located in the historic Tidwell District
about 10 miles west of Green River, Utah. Most of the property is north of Interstate Highway 70 at the Hanksville exit.
Energy Fuels became operator of the San Rafael Project when
it acquired Magnum Minerals in June 2009. It consisted of two core uranium deposits, the Deep Gold and the Down Yonder. In January
2011, EFR acquired the 10 Hollie claims from Titan Uranium. These claims covered the eastern portion of the Deep Gold deposit,
greatly increasing resources. WUC acquired the property from Energy Fuels and currently holds the 146 claims in the project area.
The San Rafael Uranium Project is currently being held
as a property that is exploratory in nature with no identified reserves. Exploration and mining plans have not been prepared for
the project. Western Uranium Corporation has not yet undertaken any development work at the property. Power and water sources have
not yet been formally assessed.
Magnum’s acquisition of the claims and some of the data
Magnum purchased encumbers the claims. This includes a 2% Net Smelter Return royalty to Uranium One, successor to Energy Metals
for claims acquired by Magnum as earn-in to a JV, and a 2% net sales price royalty to Kelly Dearth on the BM claims. There is no
royalty on the Hollie claims.
The unpatented claims are located on approximately 2,900 acres
of land administered by the U.S. Bureau of Land Management in sections 13, 14, 23, 24, 25, 26, and 35, T21S, R14E, SLPM, Emery
County, Utah. Holding cost $22,630 due to BLM for claim maintenance fees prior to September 1 each year. The San Rafael Project
is located approximately 152 miles from the White Mesa Mill at Blanding, Utah. It would be about 139 miles to the Pinon Ridge mill
proposed by EFRC near Naturita, Colorado.
Accessibility
The property is located on the eastern side of the San Rafael
Swell in east-central Utah, approximately 140 air miles southeast of Salt Lake City. The little desert community of Green River,
Utah is located about ten miles to the east. In a general sense the San Rafael Uranium Project property position lies within a
wedge shaped area, roughly bound along its northeast edge by US Highway 6-50 and along its southeast edge by Interstate 70.
Concerning additional local access features, U.S. Highway 6-50
crosses just north of the greater San Rafael Uranium Project area in a northwesterly direction and is roughly paralleled by the
regional railroad line. Access to the property is generally good year around, except for periods of heavy snowstorms during December
through February and increased monsoon rains and summer cloudburst storms during August through October. Access for drilling and
other exploration activity is excellent, except during occasional heavy rainy periods which can create heavy flash flooding and
roads mudding-up and becoming impassable.
History
The Deep Gold deposit was originally discovered by Continental
Oil Company (Conoco) and Pioneer Uravan geologists in the late 1960s and 1970s to early 1980s, respectively. Exploration drilling
was conducted just east of the core of the Tidwell Mineral Belt and north-northeast of the Acerson Mineral Belt. The area containing
the deposits was considered to contain highly prospective paleo trunk stream channel trends. Some of the larger historic producing
mines in the area were Atlas Minerals’ Snow, Probe, and Lucky Mines. The deposit in the San Rafael Project is an open concordant,
channel-controlled, sandstone-hosted, trend type, with mineralization hosted in the upper sandstone sequence of the Salt Wash Member
of the Upper Jurassic Morrison Formation.
In addition to Conoco, Pioneer Uravan, and Atlas Minerals, the
US Atomic Energy Commission (AEC) and other companies (Union Carbide, Energy Fuels Nuclear, and others) conducted exploration drilling
and mining in the area. Some of these companies performed historic resource estimates on the Deep Gold deposits, but, they are
not considered compliant with NI 43-101 standards. These resource estimates are of historical importance, were generated by senior
mining companies with significant uranium exploration and production experience and are considered as relevant checks to this updated
Technical Report.
Depth to mineralization at the Deep Gold deposit in Section
23 averages 800 feet, with hole depths averaging approximately 1,000 feet. Magnum purchased and otherwise acquired most of the
available historic exploration data produced by the previous operators. A 100 hole, 100,000 foot drilling program is warranted
to discover and define additional uranium resources. Total cost for this work would be $US 1.3 million to $US 1.5 million, based
on an all-inclusive cost of $US 15/foot.
The Tidwell Mineral Belt and the San Rafael Uranium District
have been the sites of considerable historic exploration drilling and production, with over 4 million pounds of uranium and 5.4
million pounds of vanadium produced. Production from the Snow, immediately up dip of the Deep Gold deposit, which produced for
nine years, starting in March 1973 and ending in January, 1982 consisted of 650,292 pounds of U3O8 contained in 173,330 tons of
material at an average grade of 0.188% U3O8 (Wilbanks, 1982).
O. Jay Gatten, P. Geol., LLC was commissioned
by Western Uranium to prepare an Independent Technical Report compliant with the Canadian National Instrument 43-101 on the San
Rafael Uranium Project (including the: Deep Gold Uranium Deposit and the Down Yonder Uranium Deposit), an advanced-stage uranium
property. The report was finalized on November 19, 2014 and filed on sedar.com on November 20, 2015.
The filed Technical Report states that the Deep Gold deposit
of the San Rafael Project comprises a historic indicated uranium resource of 475,000 tons grading at 0.25% U3O8 containing 2,415,300
lbs U3O8 and a historic inferred Mineral Resource of 92,350 tons grading at 0.32% U3O8 containing 587,800 lbs U3O8. This Technical
Report resource is an historic estimate under NI 43-101. The historic mineral resource estimate was calculated by using polygonal
and statistical methods. Both methods have been successfully applied in the evaluation of resources at many prospects and
operating mines within the Salt Wash sandstone uranium deposits.
The San Rafael Uranium Project Technical Report filed by Western
Uranium estimates mineral resources and not reserves. That report does not use categories other than “mineral resources”
and “mineral reserves”, and the San Rafael Uranium Project property was reported as having no reserve quality mineralization.
There is no more recent or available data on the San Rafael Uranium Project resource than that of the Western Uranium Technical
Report from 2014. In order to disclose the historic resource as current, the Company needs to have completed and filed an NI 43-101
technical report on sedar.com which includes discussion on the reasonable prospect for economic extraction of the mineral resource.
A qualified person (as understood under NI 43-101) has not done sufficient work to classify the historical estimate as current
mineral resources or mineral reserves, and the Company is not treating the historical estimate as current mineral resources or
mineral reserves. In order to upgrade or verify the historical estimate provided by the Western Uranium Technical Report, the Company
would have to engage a qualified person to, among other things, take account of any exploration or other work on the San Rafael
Uranium Project since the date of the historical estimate and otherwise produce a report under NI 43-101.
Project Geology
Geologically, the main hosts for uranium-vanadium
mineralization in the San Rafael Project are the fluvial sandstone beds assigned to the upper part of the Salt Wash Member of the
Jurassic Morrison Formation.
Restoration and Reclamation
All exploration permits have been terminated and all bonds released.
An EA was completed by BLM in 2008 for drilling up to 150 holes. A large area has been surveyed for cultural and paleontological
resources which would expedite future exploration permits. No mine permitting activities have yet occurred.
Permitting Status
All exploration permits have been terminated
and all bonds released. An EA was completed by BLM in 2008 for drilling up to 150 holes. A large area has been surveyed for cultural
and paleontological resources which would expedite future exploration permits. No mine permitting activities have yet occurred.
The Property
On July 1, 2014 PRM concluded a deal with EFR to acquire 44
contiguous unpatented mining claims on the Utah side of the Colorado-Utah state line at the head of Summit Canyon at the south
end of the Uravan Mineral Belt.
The 94 unpatented claims are located on approximately
1,942 acres land administered by the U.S. Bureau of Land Management in sections 34 and 35, T32S, R26E, SLPM, San Juan County, Utah
and sections 25 and 26, T43N, R20W, NMPM, and sections 19, 29, 30, 31, and 32, T43N, R19W, NMPM San Miguel County, Colorado. Holding
cost is $14370 due to BLM for claim maintenance fees prior to September 1 each year. The Sage Project is located approximately
56 miles from the White Mesa Mill at Blanding, Utah. It would be about 78 miles to the Piñon Ridge mill
proposed by Pinon Ridge Corporation near Naturita, Colorado. The property has access to grid power, however, no source of industrial
water has yet been identified. The Sage Mine Project is currently being held as a property that is exploratory in nature with no
identified reserves. Exploration and mining plans have not been prepared for the project. Western Uranium Corporation has not yet
undertaken any development work at the property.
Accessibility
The Sage Plain Project property can be accessed from the north,
south, and east on paved, all-weather county roads. The nearest towns with stores, restaurants, lodging, and small industrial supply
retailers are Monticello, Utah, 26 road miles to the west, and Dove Creek, Colorado, 20 road miles to the southeast. Larger population
centers with more supplies and services are available farther away at Moab, Utah (61 road miles to the north) and Cortez, Colorado
(54 road miles to the southeast).
U.S. Highway 491 connects Monticello, Utah to Dove Creek and
Cortez, Colorado. There are two routes north from this highway to the project. At one mile west of the Colorado/Utah state line
(16 miles east of Monticello or 10 miles west of Dove Creek), San Juan County Road 370 goes north for 10 miles to the Calliham
Mine portal site drive way. The mine portal is one-half mile east of Road 370, on a private road. An alternate route is to turn
north on Colorado Highway 141(2 miles west of Dove Creek) for 9.5 miles to Egnar, Colorado, then turn west on San Miguel County.
Road H1 for 1.2 miles before intersecting San Juan County Road 370. Road 370 would be taken north for 4 miles to the Calliham Mine
portal site driveway. Road H1 from Egnar would also be used if one was traveling to the project on Highway 141 from farther north
in Colorado, such as Naturita, Colorado (a total of 62 miles away).
History
The property includes the historic producing Sage Mine and boarders
the famous Deremo Mine and the Calliham Mine (combined historic production of over 8 million lbs. U3O8 and
70 million lbs. V2O5). The uranium-vanadium deposits occur in the upper and middle sandstones of the Salt Wash Member
of the Morrison Formation.
WUC is in possession of historic mine and drill maps. About
200 historic holes were drilled on the claims at the Sage Mine. A considerable, but unknown amount of drilling occurred historically
on the eastern (Colorado) part of the claims along the benches of Summit and Bishop Canyons. Historic production from several small
mines occurred on the Colorado claims (Red Ant, Black Spider, etc.).
The Sage Mine was developed, operated, and permitted by Atlas
Minerals in the 1970s. It closed in 1982 and was ultimately sold and the permit transferred to Butt Mining Company under a Small
Mine NOI. Jim Butt operated the mine for a short time in the early 1990s when vanadium prices were high; however, the mine has
been idle since that time.
In the fall of 2011, Colorado Plateau Partners drilled seven
holes totaling 4,873 feet at the Sage Mine property to confirm historic map data and explore for a possible east-west channel connecting
the mine to a mineralized body to the west. The drilling was successful in meeting the objectives of confirming the accuracy of
the historic data and verifying a historically defined mineralized body. One hole exploring a possible mineralized trend connecting
the mine to the western mineralized body intercepted 2.0 feet of 0.407% eU3O8. Another hole intercepted mineralization greater
than 1.0 foot of 0.16% eU3O8.
Prior to the WUC acquisition of the Sage Mine property, Energy
Fuels, Colorado Plateau Partners (a Joint Venture between Energy Fuels and Lynx-Royal) completed a NI 43-101 Technical Report on
the Sage Plain Project (Technical Report on Colorado Plateau Partners LLC (Energy Fuel Resources Corporation/Lynx-Royal JV)
Sage Plain Project, San Juan County, Utah and San Miguel County, Colorado by Douglas C. Peters, Certified Professional Geologist,
Peters Geosciences Golden, Colorado December 16, 2011) (the “Sage Mine Energy Fuels Technical Report”).
The report stated that the Sage Mine portion of the Colorado
Plateau Partners properties has resources in the combined Measured and Indicated categories of ~100,000 tons containing 459,640 lbs U3O8 grading
at 0.23%, plus Inferred Resources of 41,280 tons containing 122,265 lbs U3O8 grading at 0.15%. The Sage Mine Energy Fuels Technical
Report resource is an historic estimate under NI 43-101.
The historic mineral resource estimate was calculated by a modified
polygonal method. The Sage Mine area had drill spacing of 50-150 feet. At locations where drifting or stopping has removed portions
of polygons, appropriate reductions to the resources assigned in those polygons were made. Mining assumptions were used in determining
a cutoff grade for the resource estimates. The minimum mining thickness for this type of deposit is considered to be 2 feet. Uranium
resource grades of 0.00% were used to dilute any intercept less than 1 foot of to meet the 2 feet minimum.
The Sage Mine Energy Fuels Technical Report filed by Colorado
Plateau Partners estimates mineral resources and not reserves. That report does not use categories other than “mineral resources”
and “mineral reserves”, and the Sage Mine property was reported as having no reserve quality mineralization. There
is no more recent or available data on the Sage Mine project resource than that of the Energy Fuels Technical Report from Colorado
Plateau Partners. In order to disclose the historic resource as current, the Company needs to have completed and filed an NI 43-101
technical report to sedar.com. A qualified person (as understood under NI 43-101) has not done sufficient work to classify the
historical estimate as current mineral resources or mineral reserves, and the Company is not treating the historical estimate as
current mineral resources or mineral reserves. In order to upgrade or verify the historical estimate provided by the Sage Mine
Energy Fuels Technical Report, the Company would have to engage a qualified person to, among other things, take account of any
exploration or other work on the Sage Mine since the date of the historical estimate and otherwise produce a report under NI 43-101.
Energy Fuels submitted an Exploration NOI to the BLM in March
2013 for the site thereby establishing a nominal permit for the facility. Permitting for mine expansion was started in 2012, but
was discontinued due to other priorities. This work included installing 3 monitoring wells around a proposed portable water treatment
plant (exploration permit E/037/0188; bond $16,020) and conducting baseline studies (archeology, biology, groundwater). Eight baseline
groundwater sampling events have been completed, which will allow for submittal of a complete groundwater discharge permit application
to DWQ. The Sage Mine Energy Fuels Technical Report resource provides an historic estimate. The Company has a high degree of confidence
in the referenced NI 43-101 Technical Report which references the Company’s Sage Project.
Other than offsetting some of the historic drill holes and use
of gamma logs where available, no verification of the historical data has been conducted. No core is available at the present time
from the earlier exploration or production work.
It was Douglas C. Peter’s (author of the referenced NI
43-101 Technical Report) opinion that the uranium and vanadium data from drilling in 2011 and from historical information on analyses
and down hole probing were adequate for the purposes of that technical report and for basic resource estimation using those data.
Project Geology
The Sage Plain and nearby Slick Rock and Dry Valley/East Canyon
districts uranium vanadium deposits are a similar type to those elsewhere in the Uravan Mineral Belt. The location and shape of
mineralized deposits are largely controlled by the permeability of the host sandstone. Most mineralization is in trends where Top
Rim sandstones are thick, usually 40 feet or greater.
The Sage Plain District appears to be a large channel of Top
Rim sandstone which trends northeast, as one of the major trunk channels that is fanning into distributaries in the southern portion
of the Uravan Mineral Belt. The Calliham/Crain/Skidmore (Calliham Mine) and Sage Mine deposits, as well as nearby Deremo and Wilson/Silverbell
mines appear to be controlled by meandering within this main channel.
The Morrison sediments accumulated as oxidized detritus in the
fluvial environment. During early burial and diagenesis, the through-flowing ground water within the large, saturated pile of Salt
Wash and Brushy Basin material remained oxidized, thereby transporting uranium in solution. When the uranium-rich waters encountered
the zones of trapped reduced waters, the uranium precipitated. Vanadium may have been leached from the detrital iron-titanium mineral
grains and subsequently deposited along with or prior to the uranium.
The thickness, the gray color, and pyrite and carbon contents
of sandstones, along with gray or green mudstone, were recognized by early workers as significant and still serve as exploration
guides. Much of the Top Rim sandstone in the Sage Plain Project area exhibits these favorable features; therefore, portions of
the property with only widely spaced drill holes hold potential. However, without the historic drill data, it cannot be determined
where sedimentary facies are located (e.g., channel sandstones thin and pinch-out, or sandstone grades and interfingers into pink
and red oxidized sandstone and overbank mudstones). Furthermore, locations of interface zones of the oxidized and reduced environments
are hard to predict. Until more historic data are obtained and/or more drilling occurs on the property away from the historic mines,
these outlying areas remain exploration targets.
Restoration and Reclamation
An exploration bond is posted with the Utah
Division of Oil Gas and Mining for the amount of $30,993.
Permitting Status
Although the mine is permitted (S/037/0058) and bonded ($30,993)
for reclamation with the Utah Division of Oil Gas and Mining, it is not permitted for mining. Because of its location on BLM managed
land, an Environmental Assessment will need to be prepared for the site by a third-party contractor once a Plan of Operations is
submitted for the mine operation. An amendment to the Small Mine Reclamation NOI will also be needed with Utah Division of Oil
Gas and Mining to allow for mine expansion.
Existing permits
include:
Small Mine Reclamation
permit with the Utah Division of Oil Gas and Mining.
Basis of Disclosure
The scientific and technical information provided in this Form
10-K on the Sage Mine, as well all data and exploration information reported in this Form 10-K on the Sage Mine, is based on the
information reported in the Sage Mine Energy Fuels Technical Report.
The Property
The 11 unpatented claims are located on approximately 220 acres
of land administered by the BLM in sections 14 and 15, T32S, R25E, SLPM, San Juan County, Utah. The Dunn is located approximately
55 miles from the White Mesa Mill at Blanding, Utah. It would be about 85 miles to the Piñon Ridge mill proposed
near Naturita, Colorado. Holding costs of the 11 claims will be $1,705 due to BLM before September 1 each year.
The Dunn Project is currently being held as a property that
is exploratory in nature with no identified reserves. Exploration and mining plans have not been prepared for the project. Western
Uranium Corporation has not yet undertaken any development work at the property. Power and water sources have not yet been formally
assessed.
Accessibility
The property lies in Bear Trap Canyon, a tributary at the head
of East Canyon. This is midway between the EFR Rim Mine and the Calliham/Sage mine area. Access to the Dunn project is from
West Summit Road (San Juan County Road 313), 10.8 miles north of the junction with U.S. Highway 491. West Summit Road is a two-lane
paved road that is well maintained year round. At 10.8 miles, a graveled Class D County Road (unnamed), spurs off of West Summit
Road, passes through the leased lands and terminates at the Dunn Portal at approximately 2.1 miles from the spur. The nearest town
to the Dunn project is Monticello, Utah which is approximately 65 miles away. The closest commercial airport facilities are located
in Cortez, Colorado, approximately 65 miles to the southeast, and Moab, Utah approximately 65 miles to the northwest; both airports
have daily commercial flights to-and-from Denver International Airport.
History
The first discovery of uranium-vanadium mineralization within
close proximity to the Dunn project was by Homestake Mining Company in the late 1960s at what would eventually become the Wilson
Mine 4 miles to the east. Mineralization associated with the Dunn mine was discovered by Gulf Oil Corporation in the late 1960s,
which was subsequently acquired by Homestake, followed by Atlas Minerals in the 1970’s. Between 1975 and 1983 Atlas completed
243 drill holes at the Dunn project with an average total depth of 724 feet. By 1981, Atlas had delineated a resource that could
justify the construction of a 3,825 foot decline. The decline successfully reached the perimeter of delineated mineralization,
but before any production-mining, Atlas ceased operations in 1983 when faced with financial setbacks that required them to divert
funds.
In July, 2013, Energy Fuels Resources acquired the Dunn Mine
property from American Strategic Minerals Corporation and Kyle Kimmerle.
Project Geology
The Dunn project occurs on structurally
unaffected terrain between the gently folded Boulder Knoll anticline to the southwest and the more prominent salt-cored Lisbon
Valley anticline to the northeast. The strata beneath the project are relatively flat, and no major faults or folds are expected
to disrupt bedding or unit contacts.
Uranium-vanadium mineralization at the
Dunn is hosted in the Salt Wash Member of the Jurassic Morrison formation which occurs at approximately 500 to 750 feet below the
surface. The average depth to the mineralized sandstones within the Salt Wash Member is 650 feet from the surface.
The primary uranium mineral is uraninite
with minor amounts of coffinite. The primary vanadium mineral is Montroseite.
Restoration and Reclamation.
No liabilities currently exist.
Permitting Status
No permits currently exist.
Basis of Disclosure
The scientific and technical information provided in this Form
10-K on the Dunn Project American Strategic Mineral Corporation is based on information provided in a NI 43-101 Technical Report
prepared by American Strategic Minerals Corporation (the previous owner of the Dunn Project) entitled Technical Report on American
Strategic Minerals Corporation’s Dunn Project, San Juan County, Utah by Dr. David A. Gonzales, PhD, PG, Durango, Colorado
March 23, 2012. Mr. Gonzales is a qualified person for purposes of NI 43-101. However, none of the data, other exploration information
or other results reported in that report are being incorporated into this Form 10-K.
The Property
Within the Project area, Black Range has mining agreements,
owns fee minerals, holds options to purchase fee mineral rights, holds federal unpatented mining claims and mineral leases with
the State of Colorado, and has in place surface access agreements, including:
- 1 x private Mineral Lease
- 1 x State Mineral Lease (UR3324)
- 2 x options to purchase 100% of the Hansen and Picnic Tree
Deposits
- 108 Federal unpatented mining claims
The Hansen/Taylor Ranch Project is currently being held as a
property that is exploratory in nature with no identified reserves. Neither exploration plans nor a mining plan exist for the project.
Black Range Minerals has not undertaken development work at the property since groundwater well installation in 2013. Power and
water sources have not yet been formally assessed.
Notably a portion of the Hansen/Taylor deposit was in dispute
during 2017. On September 16, 2015, in connection with the Company’s acquisition of Black Range, the Company assumed an option
and exploration agreement (the “Option and Exploration Agreement”) with STB Minerals, LLC, a Colorado limited liability
company (“STB”). The Option and Exploration Agreement gives the Company the right to purchase 51% of the mineral rights
of specific areas of the Hansen and Picnic Tree deposits (for which the Company already holds 49% of the rights). If the Company
were to exercise its option under the Option and Exploration Agreement, it would require the Company to (a) make a cash payment
of $2,500,000 immediately upon exercise; (b) issue shares of common stock to STB amounting to a value of $3,750,000 immediately
upon exercise; and (c) issue shares of common stock to STB amounting to a value of $3,750,000 on the date that is 180 days following
exercise. The Option and Exploration Agreement was scheduled to expire by its terms on July 28, 2017 if not exercised.
The Option and Exploration Agreement provided an extension for
an “event of force majeure”. Under this clause, the Company would receive an extension of the period during which
it could exercise its option if it experiences an unreasonable delay outside its control that prevents it from exercising the option.
On May 10, 2017, the Company provided to STB a notice that it was exercising the force majeure clause due to the delay by government
regulators in licensing the Company’s ablation technology and permitting mining at the Hansen property. STB has contested
the Company’s finding that an event of force majeure has occurred. Ongoing negotiations continued until September 21, 2017
when the Company and STB agreed to settle the matter through the pre-established arbitration mechanism. Prior to the commencement
of arbitration, a settlement was agreed to on February 28, 2018 through the execution of an Amendment of Option and Exploration
Agreement. As consideration, the Company paid STB a $20,000 extension payment and granted STB the right to seek a bona fide written
offer over the remaining term, and agreed to the removal of the force majeure clause from the agreement. The Company received an
extension until July 28, 2019 and a right of first refusal to match any bona fide written offer. Hence the Company already owns
49% of the resource property and retains an option to purchase the 51% of the resource property that the Company does not already
own for the duration of the agreement. Further the Company believes the execution of this agreement is without financial implications,
and as such, the Company has not made any adjustment to these consolidated financials related to this matter.
Accessibility
The Project is located in Fremont County, in South Central Colorado
approximately 30 miles northwest of the city of Canon City. Canon City is the closest population center, and had a population of
16,400 in 2010. The largest metropolitan area in close proximity to the Project is Colorado Springs which is located approximately
46 miles northeast of Canon City and has a population of approximately 416,000. Figure 1 shows the locations of these population
centers with respect to the Project.
For ground travel, Canon City is best accessed from Denver/Colorado
Springs via I-25 south to State Highway 115 which intersects Highway 50 just east of Canon City. For air travel, alternatives include
the Colorado Springs Municipal Airport (COS), which is a 16-gate facility served by 14 airlines and Denver’s International
Airport (DEN), which is 149 miles from Canon City. There is a small airport, Fremont County Airport (CNE), located in Canon City,
which is open to private flights. The property has access to grid power; however, no source of industrial water has been identified
yet.
History
Uranium mineralization was discovered in the Tallahassee Creek
District in 1954 by two groups of prospectors. Between 1954 and 1972, 16 small open pit and underground mines were operated in
the district. Discoveries, and most producing mines and production were in the Tallahassee Creek Conglomerate, with one mine, the
Smaller Mine, producing from the Echo Park Formation. Exploration efforts were minimal until Rampart Exploration Company (Rampart),
under contract to Cyprus, explored the Taylor Ranch area beginning in 1974 and discovered the Hansen Uranium Deposit along with
other uranium deposits in the district. Cyprus took the Hansen and Picnic Tree deposits through a positive final feasibility analysis
in 1980 for an open-pit mining and conventional uranium milling operation, and secured all necessary operating permits in 1981.
The collapse of the uranium market led to Cyprus abandoning the project which lay dormant until Black Range Minerals began activities
in late 2006.
Black Range Mineral’s Taylor Ranch Project, CO, consists
of a combination of private, BLM and State Section minerals, and private, BLM and State Section surface rights. Ownership of the
private minerals and surface has mainly been by local ranchers. Western Nuclear held a portion of the property briefly in 1968.
Cyprus gained control of mineral and surface rights during the period 1975-1978.
In 1993, Cyprus sold their Tallahassee Creek holdings to Noah
(Buddy) and Diane Taylor who had managed ranching activities on the property. The Taylors were not able to make the final payment
to Cyprus and sold the southern portion of their holdings which included the Hansen and Picnic Tree deposits to New Mexico and
Arizona Land (now NZ Minerals) in 1996 who, in 1998, sold the property to South T-Bar Ranch, a subsidiary of Colorado developer
Land Properties, while reserving a 49% interest in the minerals.
This part of Cyprus’ prior holdings was subdivided, mainly
into 35-acre parcels. Beginning in December 2006, through various purchases, leases and option agreements, Black Range Minerals
has obtained mineral rights to most of the original Cyprus holdings.
Prior to the Hansen/Taylor Project being acquired by WUC, a
mineral resource for the Hansen/Taylor Ranch Project for Black Range Minerals Limited. Black Range Reported a JORC compliant indicated
uranium resource of 29,730,000 tons grading at 0.063% U3O8 containing 37,480,000 lbs U3O8 and an inferred uranium resource of 43,681,000
tons grading at 0.058% U3O8 containing 50,443,000 lbs U3O8. This historic resource estimate was originally reported to Black Range
Minerals Limited by Tetra Tech in four resource memos (collectively, the Tetra Tech Reports): 1) High Park Kriging Resources –
Taylor Ranch Uranium Project, April 25, 2008; 2) North Hansen, Boyer Kriging Resources – Taylor Ranch Uranium Project, April
29, 2009; 3) Technical Memorandum – Boyer, Hansen and Picnic Tree Area Kriging Resources – Taylor Ranch Uranium Project,
August 24, 2009; and 4) Technical Memorandum – Boyer, Hansen and Picnic Tree Area Kriging Resources – Taylor Ranch
Uranium Project (Updated 2010), August 12, 2010. These memos were originally prepared by Rex Bryan of Tetra Tech, a qualified person
under NI 43-101. The results reported in the Tetra Tech Reports are historical estimates under NI 43-101.
There is high confidence in the geologic interpretation of the
historic Black Range Minerals resource provided in the Tetra Tech Reports. The deposit is stratified and laterally consistent drill
hole logging and surface mapping supports this conclusion. The data source for geologic interpretation is primarily drill hole
logs and surface mapping. The model currently assumes minimal post mineralization faulting. Deposit domains were confined by corresponding
geologic units. Continuity of geology is on a regional sedimentary scale and is regular. Grade continuity is subject to deposition
of carbonaceous material and oxidation reduction interfaces of palaeo-groundwater carrying mobilized uranium. Commonly accepted
multi-pass kriging methods were used to estimate the mineral resources. Uranium domains were modeled using wireframe solids, resources
were quantified outside the solids with drastically reduced search ranges. Estimates were checked and compared to historic estimates.
Blocks were sized as a tradeoff between mineralized shapes and general mining selectivity. The block heights are four to six times
the half foot sample collection but block lengths and widths are several times smaller than the drill spacing in order to adequately
fit the mineralized shapes. It is assumed that due to the soft sedimentary nature of the mineral zone, good selectivity can be
achieved.
The historic Black Range Minerals resource reported in the Tetra
Tech Reports uses JORC indicated and inferred resource categories and does not contain reserves. That report does not use categories
other than “mineral resources” and “mineral reserves”. There are no more recent estimates or data available
to WUC or Black Range Minerals. In order to verify this estimate, the Company would need to prepare a NI 43-101 Technical Report
to disclose the mineral resources as current. This would involve, among other things verifying the results under NI 43-101 standards
and potentially conducted new or additional analyses under NI 43-101 standards, as well as taking into account any exploration
or other work conducted on this property since the latest of the Tetra Tech Reports. A qualified person (as defined under NI 43-101)
has not completed sufficient work to classify this historical estimate as current under that rule, and the Company is not treating
this historical estimate as current.
Project Geology
The deposits that make up the Project are tabular sandstone
deposits associated with redox interfaces. The mineralisation is hosted in Tertiary sandstones and/or clay bearing conglomerates
within an extinct braided stream, fluvial system or palaeo channel. Mineralisation occurred post sediment deposition when oxygenated
uraniferous groundwater moving through the host rocks came into contact with redox interfaces, the resultant chemical change caused
the precipitation of uranium oxides. The most common cause of redox interfaces is the presence of carbonaceous material that was
deposited simultaneously with the host sediments. In parts of the Project the palaeochannel has been covered by Tertiary volcanic
rocks and throughout the Project basement consists of Pre-Cambrian plutonics and metamorphic rocks. The volcanic and Pre-Cambrian
rocks are believed to be the source of the uranium.
Restoration and Reclamation.
BRM has a bond of $154,927 with the DRMS covering exploration
activities for the project.
Permitting Status
The project currently has an exploration permit through the
Colorado Division of Reclamation, Mining and Safety as well as a Conditional Use Permit with the Fremont County Planning and Zoning
Department.
Basis of Disclosure
The scientific and technical information provided in this Form
10-K on the Hansen/Taylor Ranch Project, as well all data and exploration information reported in this Form 10-K on the Hansen/Taylor
Ranch Project, is based on the information reported in the Tetra Tech Reports.
Non - Material Properties
The Property
The Van#4 is located in the Uravan Mineral Belt on Monogram
Mesa in Montrose County, Colorado. The property had been held by Denison and its predecessors for many years. The property consists
of 80 unpatented mining claims covering the mine site and long-known deposit to the east, plus two large claim groups to the north,
east, and south with exploration potential.
The 80 unpatented claims are located on approximately 1,900 acres
land administered by the U.S. Bureau of Land Management in sections 27, 28, 29, 33, and 34, T48N, R17W, NMPM, and some in section
3, T47N, R17W, Montrose County, Colorado. The Van#4 Mine is located approximately 112 miles from the White Mesa Mill at Blanding,
Utah. It would be about 10 miles to the Piñon Ridge mill near Naturita, Colorado. The Holding costs of the
80 claims will be $12,400 due to BLM before September 1 each year. There are no royalties encumbering these
claims.
The property includes the Van#4 shaft and associated surface
facilities, which need renovation. The mine is connected to the Ura decline on claims in Bull Canyon to the southwest,
not owned by WUC. It has been on standby for many years. Denison completed reclamation of two of the ventilation holes in
2008 and 2010. The property has access to grid power; however, no source of industrial water has been identified yet. The Van 4
mine is currently being held as a property that is exploratory in nature. Exploration and mining plans have not been prepared for
the project and the mine permit is in Temporary Cessation status. Western Uranium Corporation has not yet undertaken any development
work at the property. Power and water sources have not yet been assessed.
Accessibility
The Van#4 mine is accessible via Montrose
County Roads year round.
History
The Van#4 was initially permitted in the late 1970s and early
1980s by Union Carbide as part of a number of small mines named the Thunderbolt Group. Energy Fuels Nuclear, Inc. (EFN) acquired
the mine in 1984 and then transferred the mine and permits to International Uranium Corporation (IUC) in 1997. IUC re-permitted
the mine with DRMS (then known as the Division of Minerals and Geology) in 1999 because the previous permit had included other
mines in the area that were not acquired by IUC. Mine Permit M-1997-032 with DRMS is currently in good standing and bonded
for $75,057. Amendment AM-1, which incorporated the approved EPP, was issued on May 30, 2012. The permit has been transferred over
the years from IUC to Denison Mines (USA) Corp. to Energy Fuels Resources (USA) Inc. and now to WUC by way of PRM.
Project Geology
The uranium-vanadium deposits occur in the upper and middle
sandstones of the Salt Wash Member of the Morrison Formation. Deposits in this part of the Uravan Mineral Belt have a moderate
V2O5: U3O8 ratio. WUC is in possession of much historic mine and drill data (former Union Carbide/Umetco property), as
well as up-to-date mine maps. Denison drilled most recently (summer 2008) 21 wide-spaced exploration holes in sections 27
and 34. All have been reclaimed and the permit terminated.
Restoration and Reclamation.
There is a reclamation bond held by the
Colorado DRMS for $75,057.
Permitting Status
Permit compliance is currently limited to an annual stormwater inspection; stormwater improvement
work was completed in 2010 and 2012. The air permit with APCD was recently allowed to lapse, as the company does not have any immediate
development or operation plans for the mine. The mine does not have EPA approval for radon emissions; however, this approval may
not be needed to restart mining, as the life-of-mine production will likely be less than 100,000 tons. The DRMS mining permit was
put into Temporary Cessation in February, 2014. Existing major permits at the mine include:
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BLM Plan of Operations COC-62522 (same as DRMS Permit M-97-032)
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DRMS 110d (Small Mine, DMO) Mine Permit M-97-032
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A prior owner of the
Van 4 Mine had been granted a first Temporary Cessation from reclamation of the mine by the Colorado Mined Land Reclamation Board
(“MLRB”) which was set to expire June 23, 2017. Prior to its expiration, PRM formally requested an extension through
a second Temporary Cessation. PRM subsequently, participated in a public process which culminated in a hearing on July 26, 2017.
Prior to the hearing, three non-profit organizations who pursue environmental and conservation objectives filed a brief objecting
to the extension. The MLRB board members voted to grant a second five-year Temporary Cessation for the Van 4 Mine. Thereafter the
three objecting parties filed a lawsuit on September 18, 2017. The MLRB was named as the defendant and PRM was named as a party
to the case due to the Colorado law requirement that any lawsuit filed after a hearing include all of the parties to the proceeding.
The plaintiff organizations are seeking for the court to set aside the board order granting a second five-year Temporary Cessation
period to PRM for the Van 4 Mine. The Colorado state Attorney General is defending this action which is pending in the Denver Colorado
District Court. As a party to this action neither the Company, nor its wholly owned subsidiary, PRM has taken any action and is
monitoring this lawsuit.
The Property
On September 1, 2017, the Yellow Cat Project reached its state
lease renewal date and the Company elected not to pay the claim fees thereby surrendering the property to the state of Utah. The
Yellow Cat Project was held as a property that was exploratory in nature as it had no identified reserves nor a mining plan.
OTHER
Ferris Haggerty
The Property
A reclamation liability remains at this
Wyoming copper project. No leases or land use remain. The Ferris Haggarty project is a reclamation-only project.
Accessibility
The reclamation project is accessible 4 to 6 months out of the
year due to snow and closed access. Take Wyoming Highway west from Encampment, Wyoming for approximately 11 miles. Once across
the divide, to the northeast there is a pullout for Medicine Bow National Forest recreation. Follow 4 wheel drive route 412 (Continental
Divide Trail) for approximately 5 miles to the Haggerty creek watershed. Turn southwest onto a steep 4 wheel drive rout and travel
for approximately 1.5 miles until you are at the property.
History
The Ferris-Haggerty Mine Site was one of the richest
components of the Grand Encampment Mining District in Carbon County, Wyoming. The site was first exploited by Ed
Haggerty, a prospector from Whitehaven, England, in 1897, when he established the Rudefeha Mine on a rich deposit of copper
ore. Haggerty was backed by George Ferris and other investors, of whom all but Ferris dropped out. The partners sold an interest
to Willis George Emerson, who raised investment funding for improvements to the mine. These facilities included a 16-mile (26 km)
aerial tramway from Grand Encampment over the Continental Divide to the smelter in Encampment and a 4-mile (6.4 km)
pipeline to the mine. The mine's assets were eventually acquired by the North American Copper Company for $1 million. By 1904 the
mine had produced $1.4 million in copper ore, and was sold to the Penn-Wyoming Copper Company. However, even with copper prices
peaking in 1907, the company had difficulty making a profit from the remove mine site. The company was over-capitalized and under-insured,
and was suffered devastating fires at the mine site in March 1906 and May 1907 which halted production. Business disputes and a
fall in copper prices prevented re-opening of the mine even after it was rebuilt. Machinery was salvaged after a foreclosure in
1913. A total of $2 million in copper ore was extracted from the mine during its life.
Project Geology
The Deposit is a tabular injection of magmatic metal differentiation
product at the margins of an ultramafic intrusive of early Archean age (2.2 billion years ago). This intrusive was injected into
pre-existing high silicious sandstones and shales of massive thickness (+2,000 ft). Mineralization at the Ferris-Haggarty mine
consists of disseminated pyrite and chalcopyrite grains that occur along bedding planes of the host quartzite. However, the massive
ore body mined at the Ferris-Haggarty was described by Spencer (1904) to lie along quartzite-Schist contacts and to cross cut foliation.
Based on the historic description, the ore may have been remobilized from the host quartzite during regional metamorphism and emplaced
along the quartzite-schist contact by way of permeable fractures. The impermeable hanging wall schist may have formed a natural
barrier to the ore solutions and produced an unusually rich ore body.
Restoration and Reclamation
We must get grass to grow on the drill
pad disturbance areas from drilling which took place in 2007. These drill pads are located at 10,000 feet above sea level on the
north face of a mountain on the Continental Divide.
A $10,000 reclamation bond remains with the Wyoming DEQ. Upon
completing reclamation, the Company will receive the bond money back.
INFRASTRUCTURE
The Company’s carrying value of property,
plant and equipment is as follows:
IP – Ablation - $9,488,051 The Company holds a license
to use Ablation, a proven technology that we anticipate will improve the efficiency of the sandstone hosted uranium mining process,
although there are some uncertainties about whether the anticipated benefits will be realized. See Item 1, “Business –
The Ablation Process.” Ablation is a low cost, purely physical method of uranium and vanadium ore extraction. Ablation has been initially tested in order to understand the hydro and mechanical
separation processes. The Company used a prototype Ablation test system to test several different samples of uranium ore from the
Sunday Mine Complex and the Hansen/Taylor Ranch properties. In all cases, uranium ore that was entered into the Ablation pilot
test system appeared to concentrate most of the uranium into the post ablated material consisting of a fraction of the original
mass, leaving most of the post ablated materials which did not contain any uranium. The results of these tests have not yet been
validated by a Competent Person.
During 2016, Western submitted documentation to the CDPHE for
a determination ruling regarding the type of license which may be required for the application of Ablation at the Sunday Mine Complex
within the state of Colorado. During May and June of 2016, CDPHE held four public meetings in several cities in Colorado as part
of the process. On July 22, 2016 CDPHE closed the comment period. In connection with this matter, the CDPHE consulted with the
United States Nuclear Regulatory Commission (“NRC”). In response, the CDPHE received an advisory opinion dated October
16, 2016, which did not contain support for the NRC’s opinion and with which Western’s regulatory counsel does not
agree. NRC’s advisory opinion recommends that Ablation should be regulated as a milling operation, but did recognize that
there may be exemptions to certain milling regulatory requirements due to the benign nature of the non-uranium bearing sands produced
after Ablation is completed on uranium-bearing ores. On December 1, 2016, the CDPHE issued a determination that the proposed ablation
operations at the Sunday Mine must be regulated by the CDPHE through a milling license. The 2017 increase in the blended uranium/vanadium
price has brought the Company closer to production. Consequently in 2018, Western plans to continue to advance Ablation by seeking
a further regulatory determination from the CDPHE and/or the NRC. During 2017, the Company’s regulatory counsel prepared
significant documentation in preparation for a prospective submission.
Mineral Properties $11,645,218 – The Company holds mineral
properties as outlined below.
Pinon Ridge Properties
On August 18, 2014, the Company purchased mining assets from
Energy Fuels Holding Corp. in an arm's length transaction. The mining assets include both owned and leased land in the states of
Utah and Colorado. All of the mining assets represent properties which have previously been mined to different degrees for uranium.
As some of the properties have not formally established proven or probable reserves, there may be greater inherent uncertainty
as to whether or not any mineralized material can be economically extracted as originally planned and anticipated.
The Company’s mining properties acquired
on August 18, 2014 which the Company still retains as of December 31, 2017, include: San Rafael Uranium Project located in Emery
County, Utah; The Sunday Mine Complex located in western San Miguel County, Colorado; The Van 4 Mine located in western Montrose
County, Colorado; The Sage Mine project located in San Juan County, Utah; and the Dunn project located in San Juan and San Miguel
counties, Colorado.
Black Range Properties
On September 16, 2015, in connection with the Black Range Transaction,
the Company acquired additional mineral properties. The mining assets acquired through Black Range include leased land in the states
of Colorado, Wyoming and Alaska. None of these mining assets were operational at the date of acquisition. As these properties have
not formally established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized
material can be economically extracted as originally planned and anticipated.
The Company’s mining properties acquired on September
16, 2015 which the Company still retains as of December 31, 2017, include Hansen, North Hansen, High Park, Hansen Picnic Tree,
Taylor Ranch, located in Fremont County, Colorado. The Company also acquired Keota located in Weld County, Wyoming.
In connection with the Black Range Transaction, Western assumed
a mortgage secured by land, building and improvements at 1450 North 7 Mile Road, Casper, Wyoming, with interest payable at 8.00%
and payable in monthly payments of $11,085 with the final balance of $1,044,015 due as a balloon payment on January 16, 2016. The
Company did not pay the mortgage on its due date. On May 26, 2016, the Company executed agreements with the mortgage holder whereby
in an equal exchange the mortgage was exchanged for the land, building and improvements on which it was secured, pursuant to which
no further financial consideration is required.
During the second quarter of 2016, the Company initiated actions
to cancel its coal mining leases in Alaska. In connection therewith, the Company notified the state of Alaska of its intent to
forfeit the posted bond in satisfaction of the reclamation liabilities at the site. In response to the Company’s notification,
the Company received notification that the state of Alaska was initiating forfeiture of the Company’s performance bond for
reclamation. However, the notice indicated an additional surety bond of $150,000 in excess of the $210,500 cash bond, which had
been posted by the Company upon purchase of the property. The Company and its advisors do not believe that it is obligated for
this additional amount of claimed reclamation obligation. The Company is working with its legal counsel and the State of Alaska
to resolve this matter. The Company has not recorded an additional $150,000 obligation as the Company does not expect, based on
the advice of legal counsel, to be obligated to an amount greater than that presently reflected in the reclamation liability. During
the year ended December 31, 2016, the Company adjusted the fair value of its reclamation obligation and for the Alaska mine, accreted
$183,510 to bring its reclamation liability to face value. The portion of the reclamation liability related to the Alaska mine,
and its related restricted cash are included in current liabilities, and current assets, respectively, at a value of $215,976 and
$215,976. On January 20, 2017, the State of Alaska notified the Company that its reclamation bond had been forfeited to be used
to satisfy the reclamation obligation. However, no amount had yet been determined in respect to the final cost of the reclamation
obligation.
As the properties are not in production, they are not covered
by various types of insurance including property and casualty, liability and umbrella coverage. We have not experienced any material
uninsured or under insured losses related to our properties in the past and believe our approach sufficient given the inactivity.
On September 16, 2015, in connection with the Company’s
acquisition of Black Range, the Company assumed an option and exploration agreement (the “Option and Exploration Agreement”)
with STB Minerals, LLC, a Colorado limited liability company (“STB”). The Option and Exploration Agreement gives the
Company the right to purchase 51% of the mineral rights of specific areas of the Hansen and Picnic Tree deposits (for which the
Company already holds 49% of the rights). If the Company were to exercise its option under the Option and Exploration Agreement,
it would require the Company to (a) make a cash payment of $2,500,000 immediately upon exercise; (b) issue shares of common stock
to STB amounting to a value of $3,750,000 immediately upon exercise; and (c) issue shares of common stock to STB amounting to a
value of $3,750,000 on the date that is 180 days following exercise. The Option and Exploration Agreement was scheduled to expire
by its terms on July 28, 2017 if not exercised.
The Option and Exploration Agreement provided an extension for
an “event of force majeure”. Under this clause, the Company would receive an extension of the period during which
it could exercise its option if it experiences an unreasonable delay outside its control that prevents it from exercising the option.
On May 10, 2017, the Company provided to STB a notice that it was exercising the force majeure clause due to the delay by government
regulators in licensing the Company’s ablation technology and permitting mining at the Hansen property. STB has contested
the Company’s finding that an event of force majeure has occurred. Ongoing negotiations continued until September 21, 2017
when the Company and STB agreed to settle the matter through the pre-established arbitration mechanism. Prior to the commencement
of arbitration, a settlement was agreed to on February 28, 2018 through the execution of an Amendment of Option and Exploration
Agreement. As consideration, the Company paid STB a $20,000 extension payment and granted STB the right to seek a bona fide written
offer over the remaining term, and agreed to the removal of the force majeure clause from the agreement. The Company received an
extension until July 28, 2019 and a right of first refusal to match any bona fide written offer. Hence the Company already owns
49% of the resource property and retains an option to purchase the 51% of the resource property that the Company does not already
own for the duration of the agreement. Further the Company believes the execution of this agreement is without financial implications,
and as such, the Company has not made any adjustment to these consolidated financials related to this matter.
Disposal of Mining Properties
In July and October 2016, the Company elected not to renew leases
relating to four projects that were obtained through either the August 2014 acquisition from Energy Fuels Holding Corp. or the
acquisition of Black Range Minerals. The decision to not renew the four leases was based upon a number of factors, the most significant
of which were the location of the projects, the development stage of each product, and the amount of uranium and vanadium resources
within each project. The forfeiture of these leases has no material adverse impact on the fair value of the Company’s mining
assets.
On February 16, 2017, the Company’s Boyer Ranch Lease
reached its expiration date and the Company elected not to negotiate a renewal.
On January 1, 2018 the Company’s Hansen Ranch Lease reached
its expiration date and the Company elected not to negotiate a renewal.
ITEM 3. LEGAL PROCEEDINGS
Other than described below, management is not aware of any material
legal proceedings that are pending or that have been threatened against us or our subsidiaries or any of our respective properties,
and none of our directors, officers, affiliates or record or beneficial owners of more than 5% of our common shares, or any associate
of any such director, officer, affiliate or shareholder, is (i) a party adverse to us or any of our subsidiaries in any legal proceeding
or (ii) has an adverse interest to us or any of our subsidiaries in any legal proceeding.
The Company is subject to periodic inspection
by certain regulatory agencies for the purpose of determining compliance by the Company with the conditions of its licenses. In
the ordinary course of business, minor violations may occur; however, these are not expected to result in material expenditures
or have any other material adverse effect on the Company.
A prior owner of the Van 4 Mine had
been granted a first Temporary Cessation from reclamation of the mine by the Colorado Mined Land Reclamation Board (“MLRB”)
which was set to expire June 23, 2017. Prior to its expiration, PRM formally requested an extension through a second Temporary
Cessation. PRM subsequently, participated in a public process which culminated in a hearing on July 26, 2017. Prior to the hearing,
three non-profit organizations who pursue environmental and conservation objectives filed a brief objecting to the extension.
The MLRB board members voted to grant a second five-year Temporary Cessation for the Van 4 Mine. Thereafter the three objecting
parties filed a lawsuit on September 18, 2017. The MLRB was named as the defendant and PRM was named as a party to the case due
to the Colorado law requirement that any lawsuit filed after a hearing include all of the parties to the proceeding. The plaintiff
organizations are seeking for the court to set aside the board order granting a second five-year Temporary Cessation period to
PRM for the Van 4 Mine. The Colorado state Attorney General is defending this action which is pending in the Denver Colorado District
Court. As a party to this action neither the Company, nor its wholly owned subsidiary, PRM has taken any action and is monitoring
this lawsuit.
ITEM 4. MINE SAFETY DISCLOSURES
Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that
is an operator, of a coal or other mine in the United States, and that is subject to regulation by the Federal Mine Safety and
Health Administration under the Mine Safety and Health Act of 1977 (“Mine Safety Act”), are required to disclose in
their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related
assessments and legal actions, and mining-related fatalities. As Western Uranium does not operate any coal or other mines, no such
disclosure is required.
PART II
ITEM 5. MARKET FOR REGISTRANT’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
From March 15, 2016 through May 22, 2016,
our common shares traded in the United States on the OTC Pink Open Market under the trading symbol, “WSTRF”. On May
23, 2016, our common shares subsequently commenced trading on the OTCQX Best Market under the same symbol. To date the shares have
been thinly traded.
Beginning on November 20, 2014, our common
shares have been listed in Canada on the CSE under the symbol "WUC".
The following table sets forth the range
of high and low bid information for our common shares for the periods indicated, as quoted on the CSE in Canadian dollars.
|
|
Price Range ($ CAN)
|
|
|
|
Low
|
|
|
High
|
|
Year ended December 31, 2016
|
|
|
|
|
|
|
First Quarter (March 31, 2016)
|
|
$
|
1.20
|
|
|
$
|
2.40
|
|
Second Quarter (June 30, 2016)
|
|
$
|
1.50
|
|
|
$
|
2.35
|
|
Third Quarter (September 30, 2016)
|
|
$
|
1.75
|
|
|
$
|
2.50
|
|
Fourth Quarter (December 31, 2016)
|
|
$
|
1.22
|
|
|
$
|
1.93
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
First Quarter (March 31, 2017)
|
|
$
|
1.75
|
|
|
$
|
2.80
|
|
Second Quarter (June 30, 2017)
|
|
$
|
1.27
|
|
|
$
|
1.80
|
|
Third Quarter (September 30, 2017)
|
|
$
|
0.97
|
|
|
$
|
1.28
|
|
Fourth Quarter (December 31, 2017)
|
|
$
|
0.85
|
|
|
$
|
1.13
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
First Quarter (through March 29, 2018)
|
|
$
|
0.62
|
|
|
$
|
0.88
|
|
The following table sets forth the range
of high and low bid information for our common shares for the periods indicated, as quoted on the OTC Markets in United States
dollars.
|
|
Price Range
|
|
|
|
Low
|
|
|
High
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
Second Quarter (June 30, 2017)
|
|
$
|
1.00
|
|
|
$
|
1.44
|
|
Third Quarter (September 30, 2017)
|
|
$
|
0.80
|
|
|
$
|
1.00
|
|
Fourth Quarter (December 31, 2017)
|
|
$
|
0.66
|
|
|
$
|
0.90
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
First Quarter (through March 29, 2018)
|
|
|
0.47
|
|
|
|
0.72
|
|
Stockholders
According to our transfer agent, as of
March 29, 2018 there were approximately 3,487 holders of record of our common shares.
Dividends
We have not declared or paid any dividends
on our common shares and do not anticipate paying cash dividends in the foreseeable future. We plan to retain any future earnings
for use in our business operations. Any decisions as to future payment of cash dividends will depend on our earnings and financial
position and such other factors as the Board deems relevant.
Equity Compensation Plan Information
The Company maintains an Incentive Stock
Option Plan (the “Plan”) that permits the granting of stock options as incentive compensation. Shareholders of the
Company approved the Plan on June 30, 2008 and amendments to the Plan on June 20, 2013, and the Board of Directors approved additional
changes to the Plan on September 12, 2015.
The purpose of the Plan is to attract,
retain and motivate directors, management, staff and consultants by providing them with the opportunity, through stock options,
to acquire a proprietary interest in the Company and benefit from its growth.
At December 31, 2017 and 2016, a total
of 2,146,996 and 1,346,996 stock options, respectively were issued under the plan outstanding.
The Plan provides that the aggregate number
of common shares for which stock options may be granted will not exceed 10% of the issued and outstanding common shares at the
time stock options are granted. At December 31, 2017, a total of 20,510,500 common shares were outstanding, and at that date the
maximum number of stock options eligible for issue under the Plan was 2,051,000. At December 31, 2016, a total of 18,886,497 common
shares were outstanding, and at that date the maximum number of stock options eligible for issue under the Plan was 1,888,650 (10%
of the issued and outstanding common shares).
A stock option exercise price shall not
be less than the most recent share issuance price. The maximum term is five years. There are no specific vesting provisions under
the Plan. Options are non-assignable and non-transferable except that stock options may be transferred to the spouse of an optionee
or to the registered retirement savings plan or registered pension plan of an optionee.
The Plan provides if the optionee's employment
is terminated for any reason, or if the service of a director, senior executive or consultant of the Company who is an optionee
is terminated, any vested stock option of such optionee may be exercised during a period of ninety (90) days following the date
of termination of such employment or service, as the case may be. In the case of an optionee's death, any vested stock option of
such optionee at the time of death may be exercised by his or her heirs or legatees or their liquidator during a period of one
year following such optionee's death.
The total number of common shares issuable
to any one person during a 12-month period may not exceed ten percent (10%) of the total number of common shares issued and outstanding.
Options granted to consultants providing investor relations activities must vest over 12 months in stages of no more than 25% in
any three-month period. Also, in any 12-month period, no options exercisable for more than 2% of the Company’s issued and
outstanding shares may be awarded to consultants or employees conducting investor relations activities. The Plan provides that
where options are cancelled or lapse under the Plan, the associated common shares become available again and new options may be
granted in respect thereof in accordance with the provisions of the Plan.
The Board may make any amendment to the
Plan, without shareholder approval, except an increase in the number of common shares reserved for issue under the Plan or a reduction
of an option exercise price. The terms of any existing option may not be altered, suspended or discontinued without the consent
in writing of the Optionee.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable
ITEM 7. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
General
Western was incorporated in December, 2006 under the Ontario
Business Corporations Act. During 2014, the Company acquired 100% of the issued and outstanding shares of PRM, a Delaware limited
liability company. The transaction constituted a reverse takeover of Western by PRM. After obtaining appropriate shareholder approvals,
the Company subsequently reconstituted its Board of Director and senior management team and changed its name to Western Uranium
Corporation.
On September 16, 2015, Western completed its acquisition of
Black Range, an Australian company that was listed on the Australian Securities Exchange (“ASX”) until the acquisition
was completed. Western and Black Range entered into a definitive Merger Implementation Agreement, pursuant to which Western agreed
to acquire all of the issued and outstanding shares of Black Range.
Western has registered offices at 330 Bay Street, Suite 1400,
Toronto, Ontario, Canada M5H 2S8 and its common shares are listed on the CSE under the symbol "WUC" and trade on the
United States OTCQX Best Market under the ticker symbol “WSTRF.” Its principal business activity is the acquisition
and development of uranium resource properties principally in the states of Utah and Colorado, in the United States of America.
Recent Developments
March 2017 Private Placement
On March 31, 2017, the Company completed a private placement
of 634,424 units at a price of CAD $1.75 (USD $1.35) per unit for gross proceeds of CAD $1,110,263 (USD $835,805) and net proceeds
of CAD $1,066,223 (USD $801,160). Each unit consists of one share of the Company’s common stock and a warrant for the purchase
of one share of the Company’s common stock. Each warrant is immediately exercisable at a price of CAD $3.25 and expires five
years from the date of issuance.
September 2017 Private Placement
On September 15, 2017, the Company completed a private placement
of 509,763 units at a price of CAD $0.90 (USD $0.74) per unit for gross proceeds of CAD $458,787 (USD $376,022) and net proceeds
of CAD $418,880 (USD $343,105). Each unit consisted of one share of common stock and one warrant. Each warrant is immediately exercisable
at a price of CAD $1.40 and expires five years from the date of issuance. The Company also issued broker warrants to purchase 21,751
shares of common stock at a price of CAD $1.40 per common share, which expire two years from the date of issuance.
December 2017 Private Placement
On December 29, 2017, the Company completed a private placement
of 426,334 units at a price of CAD $0.90 (USD $0.72) per unit for gross proceeds of CAD $383,071 (USD $305,918) and net proceeds
of CAD $367,059 (USD $293,131). Each unit consisted of one share of common stock and a warrant to purchase one half of one share
of common stock. Each warrant is immediately exercisable at a price of CAD $1.50 and expires two years from the date of issuance.
The Company also issued broker warrants to purchase 9,310 shares of common stock at a price of CAD $1.50 per common share, which
expire two years from the date of issuance.
Extension of Short Term Loans
On February 8, 2016, the Company and the lender agreed to further
extend the maturity of the Nueco Note to June 2016. In consideration for the extension the Company increased the principal amount
by 10% (or $25,384), increased the interest rate to 6% per annum and paid a $5,000 fee that did not reduce the interest or principal.
On June 20, 2016, the Company further extended the maturity of the Nueco Note to July 31, 2016. In consideration for the extension,
the Company paid a $5,000 fee that did not reduce the interest or principal on the Nueco Note.
On August 8, 2016, accrued interest was paid in the amount of
$13,477. On August 16, 2016, the Company further extended the maturity of the Nueco Note to November 16, 2016. In consideration
for the extension, the Company paid a fee of $10,000 which did not reduce the interest or principal on the Nueco Note. Further,
a principal payment of $90,000 was made on August 23, 2016, which reduced the outstanding principal amount to $185,564. The August
16, 2016 extension was accounted for as a modification, and as such, the extension fees were accounted for as additional debt discount
and were amortized over the remaining extended term of the note.
On November 29, 2016, the Company and the lender agreed to further
extend the maturity of the Nueco Note to January 31, 2017. In consideration for the extension, the Company paid a $5,000 fee that
did not reduce the principal or interest on the Nueco Note. The Company also made a payment of $5,155, which represented interest
on the Nueco Note through January 31, 2017.
On February 1, 2017, the Company and lender agreed to further
extend the maturity of the Nueco Note to the earlier of (a) five days after the next closing of a private placement; or (b) April
15, 2017. In consideration for the extension, the Company paid to the lender a payment in the amount of $100,000 which represented
(i) a principal reduction of $85,564; (ii) $1,186 for a prepayment of interest through April 15, 2017; and (iii) a payment of $13,250
which is a fee which does not reduce the principal or interest on the Nueco note.
On March 31, 2017, the Company repaid the Nueco Note in full.
Dual Market for Shares in the United
States
On May 23, 2016, Western Uranium shares began trading on the
OTCQX Best Market under the symbol “WSTRF”.
On June 28, 2016, the Company’s Form
10 registration statement became effective and Western became a U.S. reporting issuer. Thereafter, the Company was approved for
DTC eligibility through the Depository Trust and Clearing Corporation (DTCC), which facilitates electronic book-entry delivery,
settlement and depository services for shares in the United States. By having established dual trading markets for the Company’s
shares in both Canada and the United States, Western has comprehensive access to the large and sophisticated North American natural
resource investor markets.
Sale of Mortgage through Equal Exchange
In connection with the acquisition of Black Range, Western assumed
a mortgage secured by land, building and improvements at 1450 North 7 Mile Road, Casper, Wyoming, with interest payable at 8.00%
and payable in monthly payments of $11,085 with the final balance of $1,044,015 due as a balloon payment on January 16, 2016. The
Company did not make the final balloon payment as scheduled. On May 26, 2016, the Company executed agreements with the mortgage
holder whereby in an equal exchange the mortgage was exchanged for the land, building and improvements with which it was secured,
and pursuant to which no future financial consideration is required.
Ablation Licensing
During 2016, Western submitted documentation to the CDPHE for
a determination ruling regarding the type of license which may be required for the application of Ablation at the Sunday Mine Complex
within the state of Colorado. During May and June of 2016, CDPHE held four public meetings in several cities in Colorado as part
of the process. On July 22, 2016 CDPHE closed the comment period. In connection with this matter, the CDPHE consulted with the
United States Nuclear Regulatory Commission (“NRC”). In response, the CDPHE received an advisory opinion dated October
16, 2016, which did not contain support for the NRC’s opinion and with which Western’s regulatory counsel does not
agree. NRC’s advisory opinion recommends that Ablation should be regulated as a milling operation, but did recognize that
there may be exemptions to certain milling regulatory requirements due to the benign nature of the non-uranium bearing sands produced
after Ablation is completed on uranium-bearing ores. On December 1, 2016, the CDPHE issued a determination that the proposed ablation
operations at the Sunday Mine must be regulated by the CDPHE through a milling license. The 2017 increase in the blended uranium/vanadium
price has brought the Company closer to production. Consequently in 2018, Western plans to continue to advance Ablation by seeking
a further regulatory determination from the CDPHE and/or the NRC. During 2017, the Company’s regulatory counsel prepared
significant documentation in preparation for a prospective submission.
Letter Of Intent with Pinon Ridge Mill
The Company has entered into a letter of
intent with Pinon Ridge Corporation for use of its Ablation at the permitted uranium recovery facilities at the Pinon Ridge Mill
site. The letter of intent provides for the processing of all of Western’s ore produced by its mines in the region at the
mill site to produce U308 and vanadium utilizing both the application of Ablation mining technology and traditional milling techniques,
at a cost to be determined in a definitive agreement. The Pinon Ridge Mill license is held by Pinon Ridge Resources Corporation,
a wholly owned subsidiary of Pinon Ridge Corporation, which is owned by Mr. George Glasier, our Chief Executive Officer and Messrs. Russell Fryer and Andrew Wilder, both of whom
are directors. The letter of intent is subject to the signing of a definitive agreement between the parties
the original deadline as extended has passed but both parties will recommit to constituting a relationship in 2018. Discussions
were delayed in 2017 when the board of directors was without a director who did not have a conflict of interest from having an
ownership interest in the Pinon Ridge Mill. With the Company's appointment of a new director meeting this criteria, during the
first quarter of 2018, the prerequisites are now in place to recommence this initiative. The Pinon Ridge Mill is permitted, but
at the pre-development stage.
Production Timing Factors
The following represents forward-looking information with respect
to the commencement of production of uranium and/or vanadium and serves as an update to previously disclosed expectations. Production
may commence at a different time than anticipated herein by management. As conditions and expectations change, Western will continue
to provide updates. Western continues to position itself for flexibility with the goal of beginning production as expeditiously
as possible once market conditions for production of U308 and/or vanadium are favorable. Currently, before committing resources
to a production approach, resources have been and are continuing to be committed toward identifying the optimal regulatory and
developmental approach to deploying Ablation. Subsequently, to commence production, management will be required to raise capital
for production start-up costs. In order to minimize these costs, the Company plans to commence production at the Sunday Mine Complex
where there exists substantial mining infrastructure from years of previous production. Further, the Company will use a contract
mining approach utilizing a previous contractor who mined the properties for a former owner. However, permitting and preparation
costs will be driven by the approach to the application of Ablation and relevant regulatory requirements.
Company management believes the key production determinant will
be in the use and application of Ablation. In December 2016, the issuance of a decision letter by the CDPHE enabled the use of
Ablation at the Sunday Mine Complex in the state of Colorado under milling license regulations which also recognized the appropriateness
of exemptions to certain milling regulatory requirements. Further, the Company’s attorneys are not fully in agreement with
aspects of the decision letter from the CDPHE, thus the Company expects to pursue additional regulatory clarifications which the
Company’s management believes would make the application of Ablation potentially more economically advantageous. While resource
prices are below target levels, the Company is focusing on improving the regulatory regime which governs the application of Ablation
with the goal of minimizing future production costs.
Disposal of Mining Properties
In July and October 2016, the Company elected not to renew leases
relating to four projects that were obtained through either the August 2014 acquisition from Energy Fuels Holding Corp. or the
acquisition of Black Range Minerals. The decision to not renew the four leases was based upon a number of factors, the most significant
of which were the location of the projects, the development stage of each product, and the amount of uranium and vanadium resources
within each project.
In September 2017, the Company elected not to renew state leases
relating to two projects that were obtained through the August 2014 acquisition from Energy Fuels Holding Corp. The decision to
not renew the state leases was based upon a number of factors, the most significant of which were the tangential location of those
individual leases.
The forfeiture of these leases has no material adverse impact
on the fair value of the Company’s mining assets.
Canceling Alaska Coal Mine Leases
During the second quarter of 2016, the Company initiated actions
to cancel its coal mining leases in Alaska. In connection therewith, the Company notified the state of Alaska of its intent to
forfeit the posted bond in satisfaction of the reclamation liabilities at the site. In response to the Company’s notification,
the Company received notification that the state of Alaska was initiating forfeiture of the Company’s performance bond for
reclamation. However, the notice indicated an additional surety bond of $150,000 in excess of the $210,500 cash bond, which had
been posted by the Company upon purchase of the property. The Company and its advisors do not believe that it is obligated for
this additional amount of claimed reclamation obligation. The Company is working with its legal counsel and the State of Alaska
to resolve this matter. The Company has not recorded an additional $150,000 obligation as the Company does not expect, based on
the advice of legal counsel, to be obligated to an amount greater than that presently reflected in the reclamation liability. During
the year ended December 31, 2016, the Company adjusted the fair value of its reclamation obligation and for the Alaska mine, accreted
$183,510 to bring its reclamation liability to face value. The portion of the reclamation liability related to the Alaska mine,
and its related restricted cash are included in current liabilities, and current assets, respectively, at a value of $215,976 and
$215,976. On January 20, 2017, the State of Alaska notified the Company that its reclamation bond had been forfeited to be used
to satisfy the reclamation obligation. However, no amount had yet been determined in respect to the final cost of the reclamation
obligation. On December 31, 2017, the Company wrote off the reclamation liability related to this property and the related bond,
as the Company does not expect that the obligation to remediate will be in excess of the value of the bond.
African Ore Update
During the first quarter of 2016, the Company received a shipment
of African ore for testing to determine how the Ablation process can improve the recovery economics of a large fully developed
deposit in Africa. In the second quarter of 2016, the African ore was characterized, logged, ablated and relogged. Subsequently,
testing was completed and the results provided on a confidential basis to the owner of the African deposit. The Company has not
received any comments back from the owner of the African deposit.
Incentive Stock Option Plan
The Company maintains the Plan which permits the granting of
stock options as incentive compensation. Shareholders of the Company approved the Plan on June 30, 2008 and amendments to the Plan
on June 20, 2013, and the Board of Directors approved additional changes to the Plan on September 12, 2015.
The purpose of the Plan is to attract, retain and motivate directors,
management, staff and consultants by providing them with the opportunity, through stock options, to acquire a proprietary interest
in the Company and benefit from its growth.
The Plan provides that the aggregate number of common shares
for which stock options may be granted will not exceed 10% of the issued and outstanding common shares at the time stock options
are granted. At December 31, 2016, a total of 20,510,000 common shares were outstanding, and at that date the maximum number of
stock options eligible for issue under the Plan was 2,051,000. At December 31, 2015, a total of 18,886,497 common shares were outstanding,
and at that date the maximum number of stock options eligible for issue under the Plan was 1,888,650 (10% of the issued and outstanding
common shares).
A stock option exercise price shall not be less than the most
recent share issuance price. The maximum term is five years. There are no specific vesting provisions under the Plan. Options are
non-assignable and non-transferable except that stock options may be transferred to the spouse of an optionee or to the registered
retirement savings plan or registered pension plan of an optionee.
The Plan provides if the optionee's employment is terminated
for any reason, or if the service of a director, senior executive or consultant of the Company who is an optionee is terminated,
any vested stock option of such optionee may be exercised during a period of ninety (90) days following the date of termination
of such employment or service, as the case may be. In the case of an optionee's death, any vested stock option of such optionee
at the time of death may be exercised by his or her heirs or legatees or their liquidator during a period of one year following
such optionee's death.
The total number of common shares issuable to any one person
during a 12-month period may not exceed ten percent (10%) of the total number of common shares issued and outstanding. Options
granted to consultants providing investor relations activities must vest over 12 months in stages of no more than 25% in any three-month
period. Also, in any 12-month period, no options exercisable for more than 2% of the Company’s issued and outstanding shares
may be awarded to consultants or employees conducting investor relations activities. The Plan provides that where options are cancelled
or lapse under the Plan, the associated common shares become available again and new options may be granted in respect thereof
in accordance with the provisions of the Plan.
The Board may make any amendment to the Plan, without shareholder
approval, except an increase in the number of common shares reserved for issue under the Plan or a reduction of an option exercise
price. The terms of any existing option may not be altered, suspended or discontinued without the consent in writing of the Optionee.
Grant of Stock Options
On October 4, 2016, the Company granted an aggregate of 1,075,000
options for the purchase of common shares to ten officers, consultants, directors and employees of the Company under the Company's
Plan. The options shall have an exercise price of CAD $2.50 vesting equally commencing initially on the effective date of grant
of October 4, 2016 and thereafter on October 31, 2016 and March 31, 2017 with a five-year term from the date of grant.
On October 6, 2017, the Company granted options under the Plan
for the purchase of an aggregate of 825,000 shares of common stock to five individuals consisting of directors and officers of
the Company. The options have a five year term, an exercise price of CAD $1.60 (USD $1.28), and vest equally in thirds commencing
initially on the date of grant and thereafter on October 31, 2017, and March 31, 2018.
Appointment of Chief Financial Officer
On October 19, 2016, Robert Klein was appointed to serve as
Chief Financial Officer of the Company, replacing Andrew Wilder. Mr. Wilder has continued to serve as a director of the Company. On
October 1, 2016, Western entered into a consulting agreement with Bedford Bridge Fund LLC (“Bedford Bridge”) and Robert
Klein, pursuant to which Western retained Bedford Bridge to provide financial operating services for the Company and retained Mr.
Klein to serve as Chief Financial Officer of the Company, both subject to Board approval. On March 26, 2017, the Company provided
notice that it would be cancelling this agreement, effective April 30, 2017. On October 4, 2016, Mr. Klein was granted an option
to purchase 100,000 shares of our common stock at an exercise price of CAD $2.50 per share which expires five years from the date
of issuance. These options vest in thirds in equal installments on the date of grant, October 31, 2016 and March 31, 2017.
On May 12, 2017, the Company entered into an engagement agreement
with Robert Klein to continue his service as the Company’s Chief Financial Officer. . The engagement agreement provided for
an initial term of May 1, 2017 through June 30, 2017. The May 12, 2017 engagement agreement provided for a base salary of $12,500
per month.
On August 1, 2017, the Company entered into an engagement agreement
to extend the initial May 12, 2017 agreement with Mr. Klein. The August 1, 2017 agreement extended the term of the agreement to
provide for a term of July 1, 2017 through September 30, 2017 and provided for a base salary of $8,000 per month. This agreement
expired on September 30, 2017.
On November 13, 2017, the Company entered into an employment
agreement with Mr. Klein. The agreement became effective on October 1, 2017 and expires on September 30, 2018. The agreement may
be mutually extended for subsequent annual terms. The agreement provides for compensation of $120,000 per annum and an annual bonus
at the discretion of the Board of Directors. Pursuant to the employment agreement, once the Company raises a cumulative USD $1,000,000
subsequent to October 1, 2017, Mr. Klein’s annual base salary shall be increased. If a change of control occurs wherein the
consideration in such change of control is more than USD $2.00 per share, the Company is required to pay a lump sum to Mr. Klein
in the amount of two and one-half times Mr. Klein’s annual salary.
Appointment of Vice President – Operations
On October 24, 2016, Western appointed Michael Rutter as Vice
President Operations for the Company. Mr. Rutter has specific experience in the oversight of the construction, mechanics, electrical
and operation of the Ablation production units. Previously, Mr. Rutter was superintendent for Energy Fuels’ Utah, Colorado
and Arizona uranium production locations.
Year Ended December 31, 2017 as Compared to the Year Ended
December 31, 2016
The following table presents the Company’s financial results
for the years ended December 31, 2017 and 2016.
|
|
For the Year Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Revenue
|
|
$
|
20,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Mining expenditures
|
|
|
154,724
|
|
|
|
389,832
|
|
Professional fees
|
|
|
529,854
|
|
|
|
704,837
|
|
General and administrative
|
|
|
723,387
|
|
|
|
546,607
|
|
Consulting fees
|
|
|
320,534
|
|
|
|
359,026
|
|
Unrealized foreign exchange gain
|
|
|
-
|
|
|
|
(128,000
|
)
|
Total Operating expenses
|
|
|
1,728,449
|
|
|
|
1,872,302
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(1,708,499
|
)
|
|
|
(1,872,302
|
)
|
|
|
|
|
|
|
|
|
|
Accretion and interest expense
|
|
|
60,232
|
|
|
|
301,989
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(1,768,731
|
)
|
|
|
(2,174,291
|
)
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
|
(1,354,443
|
)
|
|
|
-
|
|
Net loss
|
|
$
|
(414,288
|
)
|
|
$
|
(2,174,291
|
)
|
|
|
|
|
|
|
|
|
|
Other Comprehensive loss
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss)
|
|
|
2,406
|
|
|
|
(34,916
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive Loss
|
|
$
|
(411,882
|
)
|
|
$
|
(2,209,207
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.13
|
)
|
Summary:
Our consolidated net loss for the year
ended December 31, 2017 and 2016 was $414,288 and $2,174,291 or $0.02 and $0.13 per share, respectively. The principal components
of these year over year changes are discussed below.
Our comprehensive loss for the years ended
December 31, 2017 and 2016 was $411,882 and $2,209,207, respectively.
Revenue
During the year ended December 31, 2017,
the Company recognized $20,000 in revenue related to a natural gas lease. The Company had no such revenue during the year ended
December 31, 2016.
Mining Expenditures
Mining expenditures for the year ended December 31, 2017 were
$154,724 as compared to $389,832 for the year ended December 31, 2016. The decrease in mining expenditures of $235,180, or 60%
was principally attributable to $30,380 in one-time costs incurred in 2016 for compiling data and an aggregate decrease of $224,588
in permitting and maintenance costs of its mines due to the Company having relinquished tangential properties, the completion of
maintenance in 2016, and decreased ablation expenditures for both regulatory and technical purposes.
Professional Fees
Professional fees for the year ended December 31, 2017 were
$529,854 as compared to $704,837 for the year ended December 31, 2016. The decrease in professional fees of $174,983, or 25% was
principally due to a decrease of $67,524 in accounting and audit fees and a decrease of $104,086 in legal fees. This was a result
of general cost cutting and elevated 2016 costs due to the expenditures required to become a United States reporting company, applying
for the Company’s common stock to trade on the OTCQX, and implementing electronic settlement in the United States through
the Depository Trust Company.
General and Administrative
General and administrative expenses for the year ended December
31, 2017 were $723,387 as compared to $546,607 for the year ended December 31, 2016. The increase in general and administrative
expense of $176,780, or 32% was primarily due to an increase in payroll expense of $188,418, as the Company’s Chief Executive
Officer first began receiving a salary in 2017. This increase was partially offset by a decrease in office expenses.
Consulting Fees
Consulting fees for the year ended December 31, 2017 were $320,534
as compared to $359,026 for the year ended December 31, 2016. The decrease in consulting fees of $38,492, or 11% was principally
related to the Company's cost cutting initiatives whereby both headcount and consulting fees paid were reduced; this was however
offset in part by increased utilization of third-party investor relations firms in the current year.
Interest Expense, net
Accretion and interest expense for the year ended December 31,
2017 was $60,232 as compared to $301,989 for the year ended December 31, 2016. The decrease of interest expense of $241,757, or
80% was primarily attributable to a decrease in interest expense due to the repayment of the Nueco Note and Siebels Note, and the
one-time accretion of $215,976 upon the 2016 acceleration of the reclamation expense of the Alaska Jonesville coal mine.
Foreign Exchange
Foreign exchange (loss) gain for the year ended December 31,
2017 was $2,406 as compared to $(34,916) for the year ended December 31, 2016. The increase of the foreign exchange gain of $37,322
is primarily due to the Canadian Dollar strengthening against the U.S. Dollar in 2017.
Liquidity and Capital Resources
The Company’s cash balance as of December 31, 2017 was
$427,020. The Company’s cash position is highly dependent on its ability to raise capital through the issuance of debt and
equity and its management of expenditures for mining development and for fulfillment of its public reporting responsibilities.
The Company expects to require additional capital in order to continue the development of Ablation. Management believes that in
order to finance the development of the mining properties and Ablation, the Company will be required to raise significant additional
capital by way of debt and/or equity. This outlook is based on the Company’s current financial position and is subject to
change if opportunities become available based on current exploration program results and/or external opportunities.
During the year ended December 31, 2017, the Company raised
USD $1,437,396 in net proceeds from the issuance of 1,570,521 units in private placements. Each unit contains one common share
and a warrant for the purchase of either one or one half common share with exercise prices ranging from CAD $1.40 to CAD $3.25.
Net cash used in operating activities
Net cash used in operating activities was $1,665,811 for the
year ended December 31, 2017, as compared with net cash used of $1,938,021 for the year ended December 31, 2016. The increase of
$272,210 in net cash used is mainly due to the Company having decreased net loss by $1,760,003 in 2017 due to an increase in our
income tax benefit of $1,354,443.
Net cash provided by financing activities
Net cash provided by financing activities for the year ended
December 31, 2017 was $1,280,261 as compared to $2,550,269 for the year ended December 31, 2016. For 2017, the cash provided by
financing activities consisted principally of the proceeds from four private placements for an aggregate 1,570,521 shares which
brought in aggregate proceeds of $1,437,396. This was offset by payments made on the Nueco Note payable as the Company paid down
notes payable balances.
Reclamation Liability
The Company’s mines are subject to certain asset retirement
obligations, which the Company has recorded as reclamation liabilities. The reclamation liabilities of the United States mines
are subject to legal and regulatory requirements, and estimates of the costs of reclamation are reviewed periodically by the applicable
regulatory authorities. The reclamation liability represents the Company’s best estimate of the present value of future reclamation
costs in connection with the mineral properties. The Company determined the gross reclamation liabilities of the mineral properties
at December 31, 2017 and, 2016 to be approximately $1,036,333 and $1,036,333, respectively. During the years ended December 31,
2017 and 2016, the accretion of the reclamation liabilities was $9,158 and $183,510, respectively. Except in regard to its Alaska
coal mine property (as discussed below), the Company expects to begin incurring the reclamation liability after 2054 and accordingly,
has discounted the gross liabilities over their remaining life using a discount rate of 5.4% to a net discounted value as of December
31, 2017 and 2016 of $412,797 and $403,639, respectively. The gross reclamation liabilities as of December 31, 2017 are secured
by certificates of deposit in the amount of $1,036,410.
During the second quarter of 2016, the Company initiated actions
to cancel its coal mining leases in Alaska. In connection therewith, the Company notified the state of Alaska of its intent to
forfeit the posted bond in satisfaction of the reclamation liabilities at the site. In response to the Company’s notification,
the Company received notification that the state of Alaska was initiating forfeiture of the Company’s performance bond for
reclamation. However, the notice indicated an additional surety bond of $150,000 in excess of the $210,500 cash bond which had
been posted by the Company upon purchase of the property. The Company and its advisors do not believe that it is obligated for
this additional amount of claimed reclamation obligation. The Company is working with its legal counsel and the State of Alaska
to resolve this matter. The Company has not recorded an additional $150,000 obligation as the Company does not expect, based on
the advice of legal counsel, to be obligated to an amount greater than that presently reflected in the reclamation liability. On
January 20, 2017, the state of Alaska notified the Company that its reclamation bond had been forfeited and that it was unlikely
that any additional amount would be due to Alaska pursuant to the Company’s reclamation obligations and since January 20,
2017, the Company has received no further communications. On December 31, 2017, the Company wrote off the reclamation liability
related to this property and the related bond, as the Company does not expect that the obligation to remediate will be in excess
of the value of the bond.
Related Party Transactions (including key management compensation)
The Company has transacted with related parties pursuant to
service arrangements in the ordinary course of business, as follows:
Entities controlled by a former member of the Board of Directors
earned consulting fees totaling $64,715 and $47,660 for the years ended December 31, 2017 and 2016, respectively. The same former
director earned director fees totaling $8,356 and $3,021 during the years ended December 31, 2017 and 2016, respectively. As of
December 31, 2017 and 2016, the Company has $1,300 and $0, respectively, in accounts payable and accrued liabilities owing to this
director. This director resigned on July 27, 2017.
Pursuant to a consulting agreement, a United States limited
liability company owned by a person who is a director (“Seller”) and until October 19, 2016, was the Company’s
CFO, entered into a contract with the Company dated January 1, 2016, (” the January 2016 Agreement”) to provide financial
and other consulting services at $8,333 per month. On October 19, 2016 the January 2016 Agreement was terminated. On the same date
a new agreement was entered into between the Company, a United States limited liability company owned by the same director and
Robert Klein (the “October 2016 Agreement”) to provide financial operating services and to have Mr. Klein serve as
the Chief Financial Officer. The term of the October 2016 Agreement was to run through July 31, 2017 and has an annual fee of $162,000
payable monthly, starting on October 1, 2016. On March 26, 2017, the Company provided notice that it would be cancelling the October
2016 Agreement, effective April 30, 2017. The acknowledgement of the termination initiated the preparation of Mr. Klein’s
engagement agreement as described in Note 8. During the years ended December 31, 2017 and 2016, the Company incurred fees of $89,049
and $94,351, respectively, to these companies. At December, 2017 and 2016, the Company had $0 and $0, included in accounts payable
and accrued liabilities payable to these companies.
Prior to the acquisition of Black Range, Mr. George Glasier,
the Company’s CEO, who is also a director, transferred his interest in a former joint venture with Ablation Technologies,
LLC to Black Range. In connection with the transfer, Black Range issued 25 million shares of Black Range common stock to Seller
and committed to pay AUD $500,000 (USD $390,350) to Seller within 60 days of the first commercial application of the ablation technology.
Western assumed this contingent payment obligation in connection with the acquisition of Black Range. At the date of the acquisition
of Black Range, this contingent obligation was determined to be probable. Since the deferred contingent consideration obligation
is probable and the amount estimable, the Company recorded the deferred contingent consideration as an assumed liability.
Going Concern
The Company has incurred continuing losses from its operations
and as of December 31, 2017 the Company had an accumulated deficit of $4,540,143 and a working capital deficiency of $444,125.
Since inception, the Company has met its liquidity requirements
principally through the issuance of notes and the sale of its shares of common stock.
The Company’s ability to continue its operations and to
pay its obligations when they become due is contingent upon the Company obtaining additional financing. Management’s plans
include seeking to procure additional funds through debt and equity financings, to secure regulatory approval to fully utilize
its ablation technology and to initiate the processing of ore to generate operating cash flows.
There are no assurances that the Company
will be able to raise capital on terms acceptable to the Company or at all, or that cash flows generated from its operations will
be sufficient to meet its current operating costs and required debt service. If the Company is unable to obtain sufficient amounts
of additional capital, it may be required to reduce the scope of its planned product development, which could harm its financial
condition and operating results, or it may not be able to continue to fund its ongoing operations. Such factors raise substantial
doubt about the Company’s ability to sustain operations for at least one year from the issuance of these financial statements.
Off Balance Sheet Arrangements
As at December 31, 2017, there were no
off-balance sheet transactions. The Company has not entered into any specialized financial agreements to minimize its investment
risk, currency risk or commodity risk.
Critical Accounting Estimates and
Policies
The preparation of these consolidated
financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts
of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during
the reporting period.
Significant assumptions about the future and other sources of
estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment
to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, include, but
are not limited to, the following: fair value of transactions involving shares of common stock, assessment of the useful life and
evaluation for impairment of intangible assets, valuation and impairment assessments on mineral properties, deferred contingent
consideration, the reclamation liability, valuation of stock-based compensation, valuation of available-for-sale securities and
valuation of long-term debt, HST and asset retirement obligations. Other areas requiring estimates include allocations of expenditures,
depletion and amortization of mineral rights and properties.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
This information appear following Item 15 of this report and
is included herein by reference
ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, our principal executive officer and principal financial officer evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)). Based on their evaluation of our disclosure controls and procedures,
our principal executive officer and principal financial officer, with the participation of the Company’s management, concluded
that our disclosure controls and procedures were not effective as of December 31, 2017, to ensure that information required to
be disclosed by the Company in the reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to management,
including our principal executive officer and principal financial officer, as appropriate to allow for timely decisions regarding
required disclosure.
Description of Material Weakness
Management has concluded that the Company’s disclosure
controls and procedures were not effective as of December 31, 2017, due to the lack of segregation of duties and the failure to
report disclosures on a timely basis.
Remediation of Material Weakness
Management has developed a plan and related timeline for the
Company to design a set of control procedures and the related required documentation thereof in order to address this material
weakness. Until the Company has the proper staff in place, it likely will not be able to remediate its material weakness.
Management’s Annual 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 a process designed 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. A company’s internal control over financial reporting includes
those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors
of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of the company’s assets that could have a material effect on the financial statements.
The Company carried out an evaluation, with the participation
of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its internal control over financial reporting
as of December 31, 2017. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”) in Internal Control-Integrated 2013 Framework. Management concluded that the Company’s
internal control over financial reporting was not effective as of December 31, 2017 because a material weakness in internal control
over financial reporting existed as of that date as a result of a lack of segregation of duties. A material weakness is a deficiency
or a combination of control deficiencies in internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.
This annual report does not include an attestation report of
our independent registered public accounting firm regarding internal control over financial reporting. Management’s report
was not subject to attestation by our independent registered public accounting firm pursuant to a provision under the Dodd-Frank
Wall Street Reform and Consumer Protection Act that grants a permanent exemption for non-accelerated filers from complying with
Section 404(b) of the Sarbanes-Oxley Act of 2002.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended December 31, 2017, the Company
carried out an internal control process analysis with the goal of solidifying the internal control structure. The Company was endeavoring
to implement those recommendation plans in 2017 with the goal of making improvements which will solidify internal controls. However,
subsequently Western embarked on cost cutting which had the impact of further concentrating responsibilities to Mr. Robert Klein,
the Company’s Chief Financial Officer.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
The following table sets forth information regarding the members
of our board of directors (the “Board”) and our executive officers.
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
George Glasier
|
|
74
|
|
President, Chief Executive Officer and Director
|
|
|
|
|
|
Robert Klein
|
|
52
|
|
Chief Financial Officer
|
|
|
|
|
|
Russell Fryer
|
|
52
|
|
Executive Chairman and Director
|
|
|
|
|
|
Bryan Murphy
|
|
49
|
|
Director
|
|
|
|
|
|
Andrew Wilder
|
|
47
|
|
Director
|
Executive Officers
George Glasier, J.D
., our Director, President
and Chief Executive Officer, founded Western Uranium Corporation on March 10, 2015. He has over thirty years’ experience
in the uranium industry in the United States, with extensive experience in sales and marketing; project development and permitting
uranium processing facilities. He is the founder of Energy Fuels Inc. (Volcanic Metals Exploration Inc.) and served as its Chief
Executive Officer and President from January 2006 to March 2010. He was responsible for assembling a first-class management team,
acquiring a portfolio of uranium projects, and leading the successful permitting process that culminated in the licensing of the
Piñon Ridge uranium mill; planned for construction in Western Montrose County, Colorado. He began his career in the uranium
industry in the late 1970’s with Energy Fuels Nuclear, which built and operated the White Mesa Mill near Blanding, Utah,
becoming the largest uranium producer in the United States.
Robert Klein
, who has served as our Chief Financial
Officer since October 19, 2016, previously served as Western’s Vice President-Finance, taking leading roles in reporting,
corporate transactions, and the public listing of the stock on both the CSE and OTCQX. This prior role was through the Cross River
Advisors LLC (“Cross River”), where Mr. Klein was the Chief Operating Officer, and began on an Operating Partner basis
with the formation of Western’s predecessor, Piñon Ridge Mining, LLC in April 2014. Previously, Mr. Klein was a Managing
Director at Analytical Research, a hedge fund and hedge fund of funds research firm which he joined in 2010. He has a broad alternative
investment background derived from operating and investment roles directly and through Exeter Analytics, a consulting firm he founded.
Among these hedge fund and hedge fund of fund roles he served as the CFO of Five Points Capital, a hedge fund spin-out from Soros
Fund Management. Earlier in his career, Mr. Klein worked for traditional institutions including the investment bank and private
investment firms of Lehman Brothers and William E. Simon & Sons. Mr. Klein holds the Chartered Financial Analyst® designation,
received an M.B.A. from the Robert H. Smith School of Business at the University of Maryland and a B.S. in Accounting from George
Mason University.
Russell
Fryer
serves as Executive Chairman and Director for Western Uranium Corporation. Mr. Fryer has 25 years’ experience
investing in developed and developing markets with a focus on mining and natural resources. With a background in engineering, Mr.
Fryer has advised mining companies in pre-production and production stages of mineral output. Mr. Fryer is a director of Ecometals
Limited. Previously, Mr. Fryer was a Managing Director at Macquarie Bank. Before Macquarie, Mr. Fryer managed investor capital
in the natural resources sector at Baobab and North Sound Capital. Throughout his career, Mr. Fryer has also worked with investment
banking firms such as Robert Fleming, HSBC and Deutsche Bank. Mr. Fryer holds a Bachelor of Business Administration degree from
Newport University in Johannesburg, South Africa along with an Advance Degree in International Taxation from Rand Afrikaans University,
also in Johannesburg, South Africa.
Non-Employee Directors
Andrew Wilder
serves
as a Director for Western Uranium Corporation and previously served as Western’s Chief Financial Officer until October 19,
2016. He is currently a Managing Member of Inventiv Capital Management, an energy infrastructure private equity business
as well as the Founder and Chief Executive Officer of Cross River, a firm that provides capital, strategic business development
and operations to alternative asset managers and operating companies. Prior to founding Cross River, Mr. Wilder co-founded and
was the Chief Operating Officer for Kiski Group, an advisory firm organized in 2009 to help institutions develop their alternative
manager platforms by helping vet managers and offer infrastructure solutions in areas of investment and business risk management.
In 2001, Mr. Wilder co-founded and served as Chief Operating Officer and Chief Financial Officer of North Sound Capital LLC, a
long/short equity hedge fund manager. North Sound launched with $15 million in July of 2001 and reached $3 billion AUM and 65 employees
within 5 years. Mr. Wilder was responsible for building and overseeing all aspects of the business ex-research. In 2003, Mr. Wilder
also co-founded Columbus Avenue Consulting, an independent fund administration business with 90 clients and $7 billion in AUA when
it was subsequently sold in 2012. Mr. Wilder’s prior career included heading operations for C. Blair Asset Management, a
$500 million long/short equity hedge fund, and serving as a Manager in audit of Deloitte & Touche (in their Cayman Islands
and Toronto practices). Mr. Wilder received the Chartered Accountant (Canada) designation, holds the CFA designation, and received
an MBA from the University of Toronto and a BA from the University of Western Ontario.
Bryan Murphy
was appointed
to serve as a Director for Western Uranium Corporation on January 31, 2018. Mr. Murphy is a Managing Partner of Quest Partners,
a boutique investment bank that focuses on the provision of M&A, corporate finance, and business strategy services. Since founding
the firm in 2006, Mr. Murphy has developed extensive international experience and relationships advising high-growth businesses
across North America, Europe and the Middle East. In the prior dozen years, Mr. Murphy held senior management roles at Canadian
Tire Corporation overseeing divisions and business lines. Additionally, Mr. Murphy was formerly a board member of Covenant House
Toronto, one of Canada’s largest homeless youth agencies. Mr. Murphy has an Honours Bachelor of Arts in Business Administration
majoring in Finance and an MBA with Distinction from the University of Western Ontario Richard Ivey School of Business.
Involvement of Officers and Directors
in Certain Legal Proceedings
None of our officers and directors
has filed for bankruptcy, been convicted in a criminal proceeding or been the subject of any order, judgment, or decree permanently,
temporarily, or otherwise limiting activities (1) in connection with the sale or purchase of any security or commodity or in connection
with any violation of Federal or State securities laws or Federal commodities laws, (2) engaging in any type of business practice,
or (3) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission or an associated person of
any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director
or employee of an investment company, bank, savings and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity.
Family Relationships
There are no family relationships among
our directors and executive officers.
Compliance with Section 16(a) of
the Exchange Act
Based solely upon a review of Form
3 and 4 reports and amendments thereto furnished to us under Rule 16a-3(d) of the Securities Exchange Act of 1934 during the fiscal
year ended December 31, 2016 and any Form 5 reports and amendments thereto furnished to us with respect to the fiscal year ended
December 31, 2016, as well as any written representation from a reporting person that no Form 5 is required, we are not aware that
any officer, director or 10% or greater shareholder failed to file on a timely basis, as disclosed in the aforementioned forms,
reports required by Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year ended December 31, 2016 except
as follows: George Glasier filed late one Form 4 reporting one transaction; Robert Klein filed late one Form 4 reporting one transaction;
Russell Fryer filed late three Form 4s reporting four transactions; Andrew Wilder filed late four Form 4s reporting five transactions;
and Siebels Hard Asset Fund Ltd. filed late one Form 4 reporting one transaction.
Code of Ethics
We have adopted a code of ethics that
applies to our officers, directors, employees and consultants. A copy of the code of ethics will be sent, free of charge, to any
person who sends a written request for a copy to Western Uranium Corporation, 330 Bay Street, Toronto, Ontario, Canada M5H 2S8.
Audit Committee
Western has a small Board of Directors
consisting of only four members. The Company has not established a separately designated audit committee of the Board of Directors.
Our Board of Directors as a whole is responsible for all responsibilities generally assigned to board committees of larger public
companies, including oversight of audits, corporate governance, board nominations, and executive compensation. The Board has determined
that one of its members, Andrew Wilder, who has previously served as Western’s Chief Financial Officer, qualifies as an “audit
committee financial expert”. Mr. Wilder is not considered to be an independent director.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation
Table
The following table sets forth information
regarding compensation earned by our named executive officers:
Name and
Principal Position
|
|
Year
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Stock
Awards ($)
|
|
|
Option
Awards ($)
|
|
|
All Other
Compensation ($)
|
|
|
TOTAL($)
|
|
George Glasier
(1)
|
|
2017
|
|
$
|
165,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
34,615
|
|
|
$
|
-
|
|
|
$
|
199,615
|
|
President and Chief
|
|
2016
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
39,852
|
|
|
$
|
-
|
|
|
$
|
39,852
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Klein
(2)
|
|
2017
|
|
$
|
102,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
34,615
|
|
|
$
|
-
|
|
|
$
|
136,615
|
|
Chief Financial Officer
|
|
2016
|
|
$
|
24,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
26,568
|
|
|
$
|
-
|
|
|
$
|
50,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Fryer
(3)
|
|
2017
|
|
$
|
163,321
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
34,615
|
|
|
$
|
-
|
|
|
$
|
197,936
|
|
Executive Chairman and Director
|
|
2016
|
|
$
|
149,244
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
39,852
|
|
|
$
|
-
|
|
|
$
|
189,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Wilder
(4)
|
|
2016
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
39,852
|
|
|
$
|
-
|
|
|
$
|
39,852
|
|
Former Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
On October
10, 2017, Mr. Glasier was granted an option to purchase 200,000 shares of our common stock at an exercise price of CAD $1.60
per share which expires five years from the date of issuance. This option vested in thirds in equal installments on the date
of grant, October 31, 2017 and March 31, 2018. On October 4, 2016, Mr. Glasier was granted an option to purchase 150,000
shares of our common stock at an exercise price of CAD $2.50 (USD $1.90) per share which expires five years from the date of
issuance. This option vested equally in thirds commencing initially on the effective date of grant of October 4, 2016 and
thereafter on October 31, 2016, and March 31, 2017.
|
(2)
|
On October 19, 2016,
Mr. Robert Klein was appointed to serve as Chief Financial Officer. On October 1, 2016, Western entered into a consulting
agreement with Bedford Bridge Fund LLC (“Bedford Bridge”) and Robert Klein, pursuant to which Western retained
Bedford Bridge to provide financial operating services for the Company and retained Mr. Klein to serve as Chief Financial
Officer of the Company, both subject to Board approval. On March 26, 2017, the Company provided notice that it would be
cancelling this agreement, effective April 30, 2017. On October 10, 2017, Mr. Klein was granted an option to purchase 200,000
shares of our common stock at an exercise price of CAD $1.60 per share which expires five years from the date of issuance.
This option vested in thirds in equal installments on the date of grant, October 31, 2017 and March 31, 2018. On October 4,
2016, Mr. Klein was granted an option to purchase 100,000 shares of our common stock at an exercise price of CAD $2.50 (USD
$1.90) per share which expires five years from the date of issuance. This option vested equally in thirds commencing initially
on the effective date of grant of October 4, 2016 and thereafter on October 31, 2016, and March 31, 2017.
|
(3)
|
Mr. Fryer is the Chief Investment Officer of Baobab. Baobab provides consulting services to the Company. During
the years ended December 31, 2017 and 2016, the Company incurred $163,321 and $149,244 of consulting fees to Baobab, respectively.
On October 10, 2017, Mr. Fryer was granted an option to purchase 200,000 shares of our common stock at an exercise price of CAD
$1.60 per share which expires five years from the date of issuance. This option vested in thirds in equal installments on the date
of grant, October 31, 2017 and March 31, 2018. On October 4, 2016, Mr. Fryer was granted an option to purchase 150,000 shares of
our common stock at an exercise price of CAD $2.50 (USD $1.90) per share which expires five years from the date of issuance. This
option vested equally in thirds commencing initially on the effective date of grant of October 4, 2016 and thereafter on October
31, 2016, and March 31, 2017.
|
(4)
|
Mr. Wilder served as Chief Financial Officer prior to October 19, 2016. Mr. Wilder is the Founder and Chief Executive Officer of Cross River, a Connecticut company that provided accounting and management services to the Company. During the year ended December 31, 2015, the Company incurred consulting fees of $119,500 to Cross River. Mr. Wilder received no compensation from the Company other than fees received through Cross River. On October 4, 2016, Mr. Wilder was granted an option to purchase 150,000 shares of our common stock at an exercise price of CAD $2.50 (USD $1.90) per share which expires five years from the date of issuance. This option vests equally in thirds commencing initially on the effective date of grant of October 4, 2016 and thereafter on October 31, 2016, and March 31, 2017.
|
Employment Agreements
George Glasier
On February 8, 2017, the Company entered into an employment
agreement with George Glasier, its Chief Executive Officer. The employment agreement provides for an initial term of January 1,
2017 through December 31, 2018, with automatic annual renewals unless the Company or the Chief Executive Officer were to provide
90 days written notice of their desire to not renew the agreement. The employment agreement provides for a base salary of $180,000
per annum and a discretionary annual cash bonus to be determined by the Company’s Board of Directors. Pursuant to the employment
agreement, if the Company terminates the employment agreement without cause, or if a change of control occurs, the Company is required
to pay to the Chief Executive Officer a lump sum payment equal to two and one-half times his annual base salary.
Russell Fryer
On July 28, 2017, Russell Fryer was appointed to serve as the
Company's Executive Chairman. On November 13, 2017, the Company entered into a consulting agreement with an affiliate of Mr. Fryer.
The agreement became effective on July 28, 2017 and, pursuant to its terms, expires on December 31, 2018. The agreement may be
terminated by either party with 90 days notice. The agreement provides for compensation of $15,000 per month and an annual bonus
at the discretion of the Board of Directors. Pursuant to the agreement, if a change of control occurs wherein the consideration
in such change of control is more than USD $2.00 per share, the Company is required to pay a lump sum in the amount of two and
one-half times the entity’s annual fee to this entity. On January 29, 2018, the Company provided the requisite 90-day notification
to terminate the consulting agreement, effective April 30, 2018. This was initiated pursuant to a proposed board review and restructuring
of the service portion of the consulting agreement outside of the director and board chairman roles. As of March 30, 2018, the
proposed board review has not yet been undertaken.
Robert Klein
On October 19, 2016, Robert Klein was appointed to serve as
Chief Financial Officer of the Company, replacing Andrew Wilder. Mr. Wilder will continue to serve as a director of the Company. On
October 1, 2016, Western entered into a consulting agreement with Bedford Bridge Fund LLC (“Bedford Bridge”) and Robert
Klein, pursuant to which Western retained Bedford Bridge to provide financial operating services for the Company and retained Mr.
Klein to serve as Chief Financial Officer of the Company, both subject to Board approval. On March 26, 2017, the Company provided
notice that it would be cancelling this agreement, effective April 30, 2017. On October 4, 2016, Mr. Klein was granted an option
to purchase 100,000 shares of our common stock at an exercise price of CAD $2.50 per share which expires five years from the date
of issuance. These options vest in thirds in equal installments on the date of grant, October 31, 2016 and March 31, 2017.
On May 12, 2017, the Company entered into an engagement agreement
with Robert Klein to continue his service as the Company’s Chief Financial Officer. The engagement agreement provides for
an initial term of May 1, 2017 through June 30, 2017. The May 12, 2017 engagement agreement provided for a base salary of $12,500
per month.
On August 1, 2017, the Company entered into an engagement agreement
to extend the initial May 12, 2017 agreement with Mr. Klein. The August 1, 2017 agreement extended the term of the agreement to
provide for a term of July 1, 2017 through September 30, 2017 and provided for a base salary of $8,000 per month. This agreement
expired on September 30, 2017.
On November 13, 2017, the Company entered into an employment
agreement with Mr. Klein. The agreement became effective on October 1, 2017 and expires on September 30, 2018. The agreement may
be mutually extended for subsequent annual terms. The agreement provides for compensation of $120,000 per annum and an annual bonus
at the discretion of the Board of Directors. Pursuant to the employment agreement, once the Company raises a cumulative USD $1,000,000
subsequent to October 1, 2017, Mr. Klein’s annual base salary shall be increased. If a change of control occurs wherein the
consideration in such change of control is more than USD $2.00 per share, the Company is required to pay a lump sum to Mr. Klein
in the amount of two and one-half times Mr. Klein’s annual salary.
Other Employee Compensation
On October 4, 2016, the Company granted an aggregate of 1,075,000
options for the purchase of common shares to ten officers, consultants, directors and employees of the Company under the Plan.
Of these options, 150,000 were granted to Mr. Glasier and 100,000 were granted to Mr. Klein. The options shall have an exercise
price of CAD $2.50 (USD $1.90), vesting equally in thirds commencing initially on the effective date of grant of October 4, 2016
and thereafter on October 31, 2016, and March 31, 2017 with a five-year term.
On October 6, 2017, the Company granted options under the Plan
for the purchase of an aggregate of 825,000 shares of common stock to five individuals consisting of directors and officers of
the Company. The options have a five year term, an exercise price of CAD $1.60 (USD $1.28), and vest equally in thirds commencing
initially on the date of grant and thereafter on October 31, 2017, and March 31, 2018.
Outstanding Equity Awards at Fiscal Year-End
Outstanding
Equity Awards Table
The following table sets forth unexercised
options, unvested stock and equity incentive plan awards outstanding for our named Executive Officers as of December 31, 2017.
Outstanding Option Awards at Fiscal
Year-End for 2017
Name
|
|
Number of securities underlying
unexercised options (#) exercisable
|
|
|
Number of securities underlying
unexercised options (#) unexercisable
|
|
|
Option exercise price ($CAD)
|
|
|
Option expiration date
|
George Glasier
|
|
|
150,000
|
|
|
|
-
|
|
|
$
|
2.50
|
|
|
10/4/2021
|
|
|
|
200,000
|
(1)
|
|
|
133,334
|
|
|
$
|
1.60
|
|
|
10/10/2022
|
Robert Klein
|
|
|
100,000
|
|
|
|
-
|
|
|
$
|
2.50
|
|
|
10/4/2021
|
|
|
|
200,000
|
(1)
|
|
|
133,334
|
|
|
$
|
1.60
|
|
|
10/10/2022
|
Russell Fryer
|
|
|
150,000
|
|
|
|
50,000
|
|
|
$
|
2.50
|
|
|
10/4/2021
|
|
|
|
200,000
|
(1)
|
|
|
133,334
|
|
|
$
|
1.60
|
|
|
10/10/2022
|
|
(1)
|
The
unvested options vest on March 31, 2018.
|
Outstanding Stock Awards at Fiscal Year-End for 2017
None.
Director Compensation
The following tables set forth a summary
of the compensation earned by each director who is not a named executive officer and who served on the Board during 2017 for the
fiscal year ended December 31, 2017.
Name
|
|
Fees Earned
or Paid in
Cash ($)
|
|
|
Stock
Awards ($)
|
|
|
Option
Awards ($)
|
|
|
Total ($)
|
|
Michael Skutezky
(1)
|
|
$
|
73,071
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
73,071
|
|
Andrew Wilder
(2)
|
|
$
|
89,049
|
|
|
$
|
|
|
|
$
|
256,064
|
|
|
$
|
345,113
|
|
(1)
|
Mr. Skutezky is the Owner of Rhodes Capital Corporation (“Rhodes Capital”) and Michael R. Skutezky BA LLB. These companies provide consulting services to the Company. During the year ended December 31, 2017, the Company incurred $64,715 to these companies, consisting of $64,715 in consulting fees and $8,356 in director fees for Mr. Skutezky’s services. Mr. Skutezky resigned from the Board on July 27, 2017.
|
(2)
|
Mr. Wilder is the owner of Bedford Bridge. During the year ended December 31, 2017, the Company incurred $89,049 to Bedford Bridge. On October 10, 2017, Mr. Wilder was granted an option to purchase 200,000 shares of our common stock at an exercise price of CAD $1.60 per share which expires five years from the date of issuance. These options vest in thirds in equal installments on the date of grant, October 31, 2017 and March 31, 2018.
|
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information with respect to the
beneficial ownership of our class of common shares as of March 29, 2018 by:
|
●
|
each person, or group of affiliated persons, known to us to beneficially own more than 5% of our outstanding common shares;
|
|
●
|
each of our directors and executive officers; and
|
|
●
|
all of our directors and executive officers as a group.
|
The amounts and percentages of common shares beneficially owned
are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. The information
relating to our 5% beneficial owners is based on information we received from such holders. Under the rules of the SEC, a person
is deemed to be a “beneficial owner” of a security if that person has or shares voting power, which includes the power
to vote or direct the voting of a security, or investment power, which includes the power to dispose of or to direct the disposition
of a security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial
ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person's
ownership percentage, but not for purposes of computing any other person's percentage. Under these rules, more than one person
may be deemed a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to
which such person has no economic interest.
Except as otherwise set forth in the footnotes to the table
below, the address of persons listed below is c/o Western Uranium Corporation, 330 Bay Street, Suite 1400, Toronto, Ontario, Canada
M5H 2S8. Unless otherwise indicated in the footnotes, each of the beneficial owners listed has, to our knowledge, sole voting and
investment power with respect to the indicated common shares.
Name of Beneficial Owner
|
|
Number of
Common Shares
|
|
Percentage of Outstanding
Common Shares (1)
|
|
|
|
|
|
5% or Greater Stockholders
|
|
|
|
|
|
|
|
|
George Glasier
(2)
|
|
|
|
5,223,333
|
|
|
|
27.1
|
%
|
Russell Fryer
(3)
|
|
|
2,911,343
|
|
|
|
15.1
|
%
|
Baobab Asset Management
|
|
|
2,561,343
|
|
|
|
13.5
|
%
|
Siebels Hard Asset Fund Ltd.
|
|
|
1,884,200
|
|
|
|
9.9
|
%
|
|
|
|
|
|
|
|
|
|
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
George Glasier
(2)
|
|
|
5,223,333
|
|
|
|
27.1
|
%
|
Russell Fryer
(3)
|
|
|
2,911,343
|
|
|
|
15.1
|
%
|
Andrew Wilder
(4)
|
|
|
350,000
|
|
|
|
1.8
|
%
|
Robert Klein
(5)
|
|
|
320,000
|
|
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group (5 persons)
|
|
|
8,804,676
|
|
|
|
43.4
|
%
|
|
|
|
|
|
|
|
|
|
*
Represents holdings of less than 1% of common shares outstanding.
(1)
|
Based on 18,940,285 common shares outstanding on March 29, 2018 and, with respect to each individual holder, rights to acquire our common shares exercisable within 60 days of March 29, 2018.
|
(2)
|
Consists of 4,873,333 shares of common stock and 350,000 shares of common stock issuable upon the exercise of stock options.
|
(3)
|
Consists of 2,561,343 common shares registered
in the name of Baobab, of which Russell Fryer is the beneficial owner and 350,000 shares of common stock issuable upon the
exercise of stock options.
|
(4)
|
Consists of 350,000 common shares issuable upon the exercise of stock options held by Mr. Wilder.
|
(5)
|
Consists of 20,000 common shares and 300,000 common
shares issuable upon the exercise of stock options held by Mr. Klein.
|
Equity Compensation Plan Information
The Company maintains an Incentive Stock
Option Plan (the “Plan”) that permits the granting of stock options as incentive compensation. Shareholders of the
Company approved the Plan on June 30, 2008 and amendments to the Plan on June 20, 2013, and the Board of Directors approved additional
changes to the Plan on September 12, 2015.
The purpose of the Plan is to attract,
retain and motivate directors, management, staff and consultants by providing them with the opportunity, through stock options,
to acquire a proprietary interest in the Company and benefit from its growth.
At December 31, 2017, a total of 1,846,996
stock options issued under the Plan were outstanding.
The Plan provides that the aggregate number
of common shares for which stock options may be granted will not exceed 10% of the issued and outstanding common shares at the
time stock options are granted. At December 31, 2017, a total of 20,510,194 common shares were outstanding, and at that date the
maximum number of stock options eligible for issue under the Plan was 2,051,000. A stock option exercise price shall not be less
than the most recent share issuance price. The maximum term is five years. There are no specific vesting provisions under the Plan.
Options are non-assignable and non-transferable except that stock options may be transferred to the spouse of an optionee or to
the registered retirement savings plan or registered pension plan of an optionee.
The Plan provides that if an optionee's
employment is terminated for any reason, or if the service of a director, senior executive or consultant of the Company who is
an optionee is terminated, any vested stock option of such optionee may be exercised during a period of ninety (90) days following
the date of termination of such employment or service, as the case may be. In the case of an optionee's death, any vested stock
option of such optionee at the time of death may be exercised by his or her heirs or legatees or their liquidator during a period
of one year following such optionee's death.
The total number of common shares issuable
to any one person during a 12-month period may not exceed ten percent (10%) of the total number of common shares issued and outstanding.
Options granted to consultants providing investor relations activities must vest over 12 months in stages of no more than 25% in
any three-month period. Also, in any 12-month period, no options exercisable for more than 2% of the Company’s issued and
outstanding shares may be awarded to consultants or employees conducting investor relations activities. The Plan provides that
where options are cancelled or lapse under the Plan, the associated common shares become available again and new options may be
granted in respect thereof in accordance with the provisions of the Plan.
The Board may make any amendment to the
Plan, without shareholder approval, except an increase in the number of common shares reserved for issue under the Plan or a reduction
of an option exercise price. The terms of any existing option may not be altered, suspended or discontinued without the consent
in writing of the Optionee.
Equity Compensation Plan Information
As of December 31, 2017
Plan Category
|
|
Number of
securities to
be issued
upon
exercise
of
outstanding
options,
warrants
and rights
|
|
|
Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights
|
|
|
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by shareholders
|
|
|
1,846,996
|
|
|
$
|
1.92
|
|
|
|
204,004
|
|
Equity compensation plans not approved by shareholders
|
|
|
-
|
|
|
|
n/a
|
|
|
|
-
|
|
Total
|
|
|
1,846,996
|
|
|
$
|
1.92
|
|
|
|
204,004
|
|
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS AND DIRECTOR INDEPENDENCE
Transactions with Related Persons
Rhodes Capital Corporation and Michael R. Skutezky BA LLB, entities
controlled by Michael Skutezky, a former member of the Board of Directors, earned consulting fees totaling $64,715 and $47,660
for the years ended December 31, 2017 and 2016, respectively. Mr. Skutezky also earned director fees totaling $8,356 and $3,021
during the years ended December 31, 2017 and December 31, 2016. As of December 31, 2017 and December 31, 2016, the Company has
$1,300 and $0, respectively, in accounts payable and accrued liabilities owing to this director. Mr. Skutezky resigned from the
Board on July 27, 2017.
Pursuant to a consulting agreement, Cross River, a US limited
liability company, entered into a contract with the Company effective January 1, 2015 to provide financial and consulting services
at an annual consultant fee of $100,000. The contract had a term of one year. On October 21, 2015, the Company entered into an
additional agreement with this same company to provide additional services to the Company, for the term of October through December
of 2015, for a monthly fee of $6,500. On January 1, 2016, the Company entered into an agreement with Bedford Bridge, a different
US limited liability company owned by the same director, to provide financial and other consulting services at $8,333 per month.
In October 2016, this contract was cancelled and a new agreement was entered into between the Company, Bedford Bridge and Mr. Robert
Klein (the “October 2016 Agreement”) to provide financial operating services and to have Mr. Klein serve as the Chief
Financial Officer. The October 2016 Agreement provided for an annual fee of $162,000 payable monthly. On March 26, 2017, the Company
provided notice that it would be cancelling the October 2016 Agreement, effective April 30, 2017. During the years ended December
31, 2017 and 2016, the Company incurred fees of $89,049 and $94,351, respectively, to these companies. At December 31, 2017 and
December 31, 2016, the Company had $0 and $0, respectively, included in accounts payable and accrued liabilities payable to these
companies.
In connection with the acquisition of Black Range on September
16, 2015, (1) common shares issued to the former shareholders of Black Range included 33,333 common shares issued to George Glasier,
our President, Chief Executive Officer and a director, and (2) liabilities assumed in the acquisition of Black Range included the
assumption of an obligation in the amount of AUD $500,000 (USD $372,000) also payable to George Glasier, contingent upon the commercialization
of the Ablation technology.
Pursuant to a consulting agreement, Baobab, a US limited liability
company owned by a person who is a director, entered into a consulting contract with the Company effective April 1, 2016 to provide
financial, advisory, and consulting services, including representing the Company to a variety of stakeholders for a six month term
ending on September 30, 2016. On October 1, 2016, this agreement was extended to January 31, 2017. Professional fees for the year
ended December 31, 2016 were $149,244, related to this agreement. As of December 31, 2017 and December 31, 2016, the Company had
$0 and $0, respectively, included in accounts payable and accrued expenses payable to this entity.
On November 2, 2016, the Company entered
into a letter of intent (“LOI”) with Pinon Ridge for use of its Ablation technology at the permitted uranium recovery
facilities at the Pinon Ridge Mill site. The LOI provides for the processing of all of Western’s ore produced by its mines
in the region at the mill site to produce U308 and vanadium utilizing both the application of ablation mining technology and traditional
milling techniques, at a cost to be determined in a definitive agreement. The Pinon Ridge Mill license is held by Pinon Ridge Resources
Corporation, a wholly owned subsidiary of Pinon Ridge. The LOI is subject to the signing of a definitive agreement between the
parties, which was contemplated to be completed on or before April 30, 2017. The LOI provided for Western to make a $40,000 deposit
payment to Pinon Ridge on or before December 1, 2016, and pay all Pinon Ridge pre-development costs incurred going forward. The
terms of the definitive agreement will provide for a formula agreed between the parties to determine how Pinon Ridge will be reimbursed
for previously paid pre-development costs incurred prior to the signing of the LOI. All pre-development costs to be paid prior
to the signing of a definitive agreement by Western will be restricted to the payment and/or reimbursement of arm’s length
transactions paid to third parties subsequent to January 1, 2014, less the initial deposit payment. The terms of the definitive
agreement will set out a formula to fairly compensate each party for their respective contributions. Pinon Ridge is a Colorado
corporation. George Glasier, who is the President and CEO and a director of Western, is a director, the sole officer, and a principal
owner of Pinon Ridge. Russell Fryer, who is a director of Western, is a director and a principal beneficial owner of Pinon Ridge
through Baobab. Andrew Wilder, who is a director of Western, is a beneficial owner of Pinon Ridge through Bedford Bridge.
ITEM 14. PRINCIPAL ACCOUNTING
FEES AND SERVICES
The following table sets forth the aggregate
fees billed by MNP LLP (“MNP”), our independent registered accounting firm for the fiscal years ended December 31,
2017 and December 31, 2016. These fees are categorized as audit fees, audit-related fees, tax fees, and all other fees. The nature
of the services provided in each category is described in the table below.
|
|
2017
|
|
|
2016
|
|
Audit fees
|
|
$
|
83,517
|
|
|
$
|
63,530
|
|
Audit-related fees
|
|
$
|
-
|
|
|
$
|
-
|
|
Tax fees
|
|
$
|
14,017
|
|
|
$
|
11,643
|
|
All other fees
|
|
$
|
-
|
|
|
$
|
-
|
|
Total fees
|
|
$
|
97,534
|
|
|
$
|
75,173
|
|
Audit fees. Consist of fees billed for
professional services rendered for the audit of the consolidated financial statements and review of the quarterly interim consolidated
financial statements. These fees also include the review of registration statements and the delivery of consents in connection
with registration statements.
Audit-related fees. There were no fees
billed by MNP for professional services rendered for audit-related services for the years ended December 31, 2017 and 2016.
Tax fees. Consists of tax preparation fees.
All other fees. There were no fees billed
by MNP for professional services rendered for other compliance purposes for the years ended December 31, 2017 and 2016.
The Company’s Board of Directors
has established pre-approval policies and procedures, pursuant to which the Board approved the foregoing audit and audit-related
services provided by MNP in 2017 and 2016 consistent with the Board’s responsibility for engaging Western’s independent
auditors. The Board also considered whether the non-audit services rendered by our independent registered public accounting firm
are compatible with an auditor maintaining independence. The Board has determined that the rendering of such services is compatible
with MNP maintaining its independence.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES
Documents Filed as Part of This Report.
(a) The following financial
statements are being filed as part of this Annual Report.
(b) The following exhibits
are being provided as required by Item 601 of Regulation S-K.
Exhibit No.
|
|
Description
|
|
|
|
2.1
(4)
|
|
Share Exchange Agreement between Pinon Ridge Mining LLC, Homeland Uranium Inc., Homeland Uranium (Utah), et al., dated November 6, 2014.+
|
|
|
|
2.2
(4)
|
|
Merger Implementation Agreement between Black Range Minerals Limited and Western Uranium Corporation, dated March 20, 2015.
|
|
|
|
2.3
(4)
|
|
Credit Facility between Western Uranium Corporation and Black Range Minerals Limited, dated March 20, 2015.
|
|
|
|
2.4
(2)
|
|
Termination and Liquidation Agreement between Ablation Technologies LLC, Black Range Minerals Ablation Holdings Inc. and Mineral Ablation, LLC dated March 17, 2015
|
|
|
|
3.1
(4)
|
|
Certificate of Incorporation, as amended.
|
|
|
|
3.2
(4)
|
|
Amended and Restated By-laws.
|
|
|
|
10.1
(4)
|
|
Form of Note payable to The Siebels Hard Asset Fund Ltd., dated September 30, 2015, including Extension Agreement dated December 16, 2015.
|
|
|
|
10.2
(4)
|
|
Form of Note payable to The Siebels Hard Asset Fund Ltd, dated February 22, 2016.
|
|
|
|
10.3
(4)
|
|
Form of Note payable to Energy Fuel Holdings Corp., dated August 18, 2014.
|
|
|
|
10.4
(4)
|
|
Form of Note payable to Nuclear Energy Corporation LLC, dated October 13, 2011, including Extension Agreement dated January 5, 2016.
|
|
|
|
10.5
(4)
|
|
Form of WUC Warrant.
|
|
|
|
10.6
(3)
|
|
Call Option Agreement
|
|
|
|
10.7
(3)
|
|
Consulting Agreement between Cross River Advisors LLC and Western Uranium Corporation dated January 1, 2015
|
|
|
|
10.8
(3)
|
|
Consulting Agreement between Cross River Advisors LLC and Western Uranium Corporation dated October 16, 2015
|
|
|
|
10.9
(3)
|
|
Consulting Agreement between Bedford Bridge Fund LLC and Western Uranium Corporation dated January 1, 2016
|
|
|
|
10.10
(3)
|
|
Consulting Agreement between Rhodes Capital Corporation and Western Uranium Corporation dated January 1, 2015
|
10.11
(2)
|
|
Technology License Agreement between Ablation Technologies LLC and Black Range Mineral Ablation Holdings Inc. dated as of March 17, 2015
|
|
|
|
10.12
(1)
|
|
Incentive Stock Option Plan (Rolling 10%), as amended
|
|
|
|
10.13
(5)
|
|
Consulting Agreement between Baobab Asset Management LLC and Western Uranium Corporation effective April l, 2016
|
|
|
|
10.14
(5)
|
|
Consulting Agreement between Bedford Bridge Fund LLC, Robert Klein and Western Uranium Corporation dated October 1, 2016
|
|
|
|
10.15
(5)
|
|
Letter of Intent between Pinon Ridge and Western Uranium Corporation dated November 2, 2016
|
|
|
|
10.16
(5)
|
|
Extension of Letter of Intent between Pinon Ridge and Western Uranium Corporation dated March 9, 2017
|
|
|
|
10.17
(5)
|
|
Extension of the Consulting Agreement between Baobab Asset Management LLC and Western Uranium Corporation effective October 1, 2016.
|
|
|
|
10.18
(6)
|
|
Employment Agreement between George Glasier and Western Uranium Corporation dated February 8, 2017
|
|
|
|
10.19
(6)
|
|
Employment Agreement between Robert Klein and Western Uranium Corporation dated May 12, 2017
|
|
|
|
10.20
(6)
|
|
Consulting Agreement between Baobab Asset Management LLC and Western Uranium Corporation dated April 1, 2017
|
|
|
|
10.21
(7)
|
|
Extension to Engagement Agreement between Robert Klein and Western Uranium Corporation dated August 1, 2017
|
|
|
|
10.22*
|
|
Employment Agreement between Robert Klein and Western Uranium Corporation dated November 13, 2017
|
|
|
|
21.1
(4)
|
|
List of Subsidiaries
|
|
|
|
31.1*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
|
|
|
31.2*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
|
|
|
32.1*
|
|
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
+
|
Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of the omitted schedules and exhibits to the SEC upon request.
|
*
|
Filed herewith
|
(1)
|
Incorporated by reference to the Company’s Form 8-K filed on October 12, 2016
|
(2)
|
Previously filed as an exhibit with Amendment No. 2 to the Company’s Form 10 filed on July 22, 2016
|
(3)
|
Previously filed as an exhibit with Amendment No. 1 to the Company’s Form 10 filed on June 22, 2016
|
(4)
|
Previously filed as an exhibit to the Company’s Form 10 filed on April 29, 2016
|
(5)
|
Previously filed as an exhibit to the Company’s Form 10-K filed on March 31, 2017
|
(6)
|
Previously filed as an exhibit to the Company’s Form 10-Q filed on May 15, 2017
|
(7)
|
Previously filed as an exhibit to the Company’s Form 10-Q filed on August 14, 2017
|
ITEM 16. FORM 10-K SUMMARY
Not applicable
SIGNATURES
Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
Western Uranium
Corporation
|
|
|
|
Dated: April 2, 2018
|
By:
|
/s/ George Glasier
|
|
Name:
|
George Glasier
|
|
Title:
|
Chief Executive Officer, President and Director
(Principal Executive Officer)
|
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Dated: April 2, 2018
|
By:
|
/s/ George Glasier
|
|
Name:
|
George Glasier
|
|
Title:
|
Chief Executive Officer, President and Director
(Principal Executive Officer)
|
Dated: April 2, 2018
|
By:
|
/s/ Robert Klein
|
|
Name:
|
Robert Klein
|
|
Title:
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Dated: April 2, 2018
|
By:
|
/s/ Russell Fryer
|
|
Name:
|
Russell Fryer
|
|
Title:
|
Executive Chairman; Director
|
Dated: April 2, 2018
|
By:
|
/s/ Bryan Murphy
|
|
Name:
|
Bryan Murphy
|
|
Title:
|
Director
|
Dated: April 2, 2018
|
By:
|
/s/ Andrew Wilder
|
|
Name:
|
Andrew Wilder
|
|
Title:
|
Director
|
WESTERN
URANIUM CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED
FINANCIAL STATEMENTS
TABLE
OF CONTENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of
Western
Uranium Corporation
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Western Uranium Corporation (the “Company”) as of December
31, 2017 and 2016, and the related consolidated statements of operations and other comprehensive loss, shareholders’ equity
and cash flows for the years then ended. In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Western Uranium Corporation, as of December 31, 2017
and 2016, and the consolidated results of its operations and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
The
Company’s Ability to Continue as a Going Concern
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 2 to the consolidated financial statements, the Company has incurred continuing losses from operations and
is dependent upon future sources of equity or debt financing in order to fund its operations. These conditions raise substantial
doubt about the Company’s ability to continue as a going concern. Management’s plans regarding those matters are also
described in Note 2. The consolidated financial statements do not include any adjustments to reflect the possible effects on the
recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome
of this uncertainty.
Basis
for Opinion
These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor is engaged to perform, an audit of its internal control over financial reporting.
As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly,
we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
|
/s/ MNP
LLP
|
|
Chartered
Professional Accountants
|
|
Licensed
Public Accountants
|
We have served as the Company’s auditor
since April 7, 2015
Mississauga,
Ontario
April
2, 2018
WESTERN URANIUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(Stated in $USD)
|
|
As
of December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
427,020
|
|
|
$
|
791,814
|
|
Prepaid expenses
|
|
|
190,435
|
|
|
|
80,734
|
|
Marketable securities
|
|
|
3,123
|
|
|
|
2,976
|
|
Restricted cash
|
|
|
-
|
|
|
|
215,976
|
|
Other
current assets
|
|
|
64,763
|
|
|
|
22,047
|
|
Total
current assets
|
|
|
685,341
|
|
|
|
1,113,547
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
820,434
|
|
|
|
820,357
|
|
Mineral properties
|
|
|
11,645,218
|
|
|
|
11,645,218
|
|
Ablation
intellectual property
|
|
|
9,488,051
|
|
|
|
9,488,051
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
22,639,044
|
|
|
$
|
23,067,173
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
602,016
|
|
|
$
|
769,907
|
|
Reclamation liability,
current
|
|
|
-
|
|
|
|
215,976
|
|
Current portion of
notes payable
|
|
|
487,450
|
|
|
|
183,125
|
|
Deferred
revenue, current portion
|
|
|
40,000
|
|
|
|
-
|
|
Total
current liabilities
|
|
|
1,129,466
|
|
|
|
1,169,008
|
|
|
|
|
|
|
|
|
|
|
Reclamation liability,
net of current portion
|
|
|
196,821
|
|
|
|
187,663
|
|
Deferred tax liability
|
|
|
2,708,887
|
|
|
|
4,063,330
|
|
Deferred contingent
consideration
|
|
|
390,350
|
|
|
|
372,000
|
|
Notes payable, net
of discount and current portion
|
|
|
-
|
|
|
|
468,368
|
|
Deferred
revenue, net of current portion
|
|
|
60,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
4,485,524
|
|
|
|
6,260,369
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity
|
|
|
|
|
|
|
|
|
Common stock, no par value, unlimited authorized shares,
20,510,806 and 18,886,497
shares issued as of December 31, 2017 and 2016, respectively and 20,510,500 and 18,886,497 shares outstanding as of December 31, 2017 and December 31, 2016, respectively
|
|
|
22,657,529
|
|
|
|
20,927,360
|
|
Treasury shares, 306 and 0 shares held in treasury as of December 31, 2017
and 2016, respectively
|
|
|
-
|
|
|
|
-
|
|
Subscription receivable
|
|
|
-
|
|
|
|
(28,429
|
)
|
Accumulated deficit
|
|
|
(4,540,143
|
)
|
|
|
(4,125,855
|
)
|
Accumulated
other comprehensive income
|
|
|
36,134
|
|
|
|
33,728
|
|
Total
shareholders’ equity
|
|
|
18,153,520
|
|
|
|
16,806,804
|
|
Total
liabilities and shareholders’ equity
|
|
$
|
22,639,044
|
|
|
$
|
23,067,173
|
|
The accompanying notes are in integral part of these consolidated financial statements.
WESTERN URANIUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
(Stated in $USD)
|
|
For the Years Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Revenues
|
|
|
|
|
|
|
Lease revenue
|
|
$
|
20,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Mining expenditures
|
|
|
154,724
|
|
|
$
|
389,832
|
|
Professional fees
|
|
|
529,854
|
|
|
|
704,837
|
|
General and administrative
|
|
|
723,387
|
|
|
|
546,607
|
|
Consulting fees
|
|
|
320,534
|
|
|
|
359,026
|
|
Unrealized foreign exchange gain
|
|
|
-
|
|
|
|
(128,000
|
)
|
Total operating expenses
|
|
|
1,728,499
|
|
|
|
1,872,302
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(1,708,499
|
)
|
|
|
(1,872,302
|
)
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
60,232
|
|
|
|
301,989
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(1,768,731
|
)
|
|
|
(2,174,291
|
)
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
|
(1,354,443
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(414,288
|
)
|
|
|
(2,174,291
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) gain
|
|
|
|
|
|
|
|
|
Foreign exchange (loss) gain
|
|
|
2,406
|
|
|
|
(34,916
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$
|
(411,882
|
)
|
|
$
|
(2,209,207
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share - basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic and diluted
|
|
|
19,569,504
|
|
|
|
17,045,568
|
|
The accompanying notes are an integral part of these consolidated financial statements.
WESTERN URANIUM CORPORATION
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
(Stated in $USD)
|
|
Common Shares
|
|
|
Treasury Shares
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
Accumulated Other Comprehensive
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Income
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2016
|
|
|
16,230,733
|
|
|
$
|
17,658,042
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(1,951,564
|
)
|
|
$
|
68,644
|
|
|
$
|
15,775,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 101,009 common shares on January 4, 2016 in private placement
|
|
|
101,009
|
|
|
|
216,534
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
216,534
|
|
Sale of 465,357 units in April and May of 2016 in private placement
|
|
|
465,347
|
|
|
|
622,174
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
622,174
|
|
Sale of 1,078,458 units on September 2, 2016 in private placement
|
|
|
1,078,458
|
|
|
|
1,407,841
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1,407,841
|
|
Sale of 1,010,950 units on December 30, 2016 in private placement
|
|
|
1,010,950
|
|
|
|
870,447
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(28,429
|
)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
842,018
|
|
Stock based compensation - amortization of stock option expense
|
|
|
-
|
|
|
|
152,322
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
152,322
|
|
Foreign exchange loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(34,916
|
)
|
|
$
|
(34,916
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,174,291
|
)
|
|
|
-
|
|
|
$
|
(2,174,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2016
|
|
|
18,886,497
|
|
|
$
|
20,927,360
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
(28,429
|
)
|
|
$
|
(4,125,855
|
)
|
|
$
|
33,728
|
|
|
$
|
16,806,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares to vendors and consultants
|
|
|
53,788
|
|
|
|
83,338
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
83,338
|
|
Receipt of subscription receivable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28,429
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28,429
|
|
Sale of 634,424 units on March 31, 2017 in private placement
|
|
|
634,424
|
|
|
|
801,160
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
801,160
|
|
Sale of 509,763 units on September 15, 2017 in private placement
|
|
|
509,763
|
|
|
|
343,105
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
343,105
|
|
Sale of 426,334 units on December 29, 2017 in private placement
|
|
|
426,334
|
|
|
|
293,131
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
293,131
|
|
Acquisition of shares into treasury
|
|
|
(306
|
)
|
|
|
-
|
|
|
|
306
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Stock based compensation - stock options
|
|
|
-
|
|
|
|
209,435
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
209,435
|
|
Foreign exchange gain
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,406
|
|
|
|
2,406
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(414,288
|
)
|
|
|
-
|
|
|
|
(414,288
|
)
|
Balance as of December 31, 2017
|
|
|
20,510,500
|
|
|
$
|
22,657,529
|
|
|
|
306
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(4,540,143
|
)
|
|
$
|
36,134
|
|
|
$
|
18,153,520
|
|
The accompanying notes are an integral part of these consolidated financial statements.
WESTERN URANIUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in $USD)
|
|
For the Years December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(414,288
|
)
|
|
$
|
(2,174,291
|
)
|
Reconciliation of net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Accretion of reclamation liability
|
|
|
9,158
|
|
|
|
183,510
|
|
Amortization of debt discount on notes payable
|
|
|
21,521
|
|
|
|
51,316
|
|
Stock based compensation
|
|
|
209,435
|
|
|
|
152,322
|
|
Change in foreign exchange on marketable securities
|
|
|
(147
|
)
|
|
|
(96
|
)
|
Deferred income taxes
|
|
|
(1,354,443
|
)
|
|
|
-
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(152,494
|
)
|
|
|
32,602
|
|
Deferred contingent consideration
|
|
|
-
|
|
|
|
(128,000
|
)
|
Accounts payable and accrued liabilities, net of shares issued for accounts payable
|
|
|
(84,553
|
)
|
|
|
(55,384
|
)
|
Deferred revenue
|
|
|
100,000
|
|
|
|
-
|
|
Net cash used in operating activities
|
|
|
(1,665,811
|
)
|
|
|
(1,938,021
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
Payment of Nueco Note
|
|
|
(185,564
|
)
|
|
|
(90,000
|
)
|
Payment of Siebels Note
|
|
|
-
|
|
|
|
(350,000
|
)
|
Proceeds from the sale of common stock in private placements, net of offering costs
|
|
|
1,437,396
|
|
|
|
2,890,269
|
|
Proceeds from Siebels Note
|
|
|
-
|
|
|
|
100,000
|
|
Receipt of subscription receivable
|
|
|
28,429
|
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
1,280,261
|
|
|
|
2,550,269
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate on cash
|
|
|
20,756
|
|
|
|
(34,916
|
)
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash
|
|
|
(364,794
|
)
|
|
|
577,332
|
|
|
|
|
|
|
|
|
|
|
Cash - beginning
|
|
|
791,814
|
|
|
|
214,482
|
|
|
|
|
|
|
|
|
|
|
Cash - ending
|
|
$
|
427,020
|
|
|
$
|
791,814
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
Shares issued from subscription payable
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Exchange of mortgage payable for land & buildings
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Shares issued for accounts payable and accrued expenses
|
|
$
|
83,338
|
|
|
$
|
-
|
|
There were no cash flows from investing activities during the years ended December 31, 2017 and 2016
The accompanying notes are an integral part of these consolidated financial statements.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
1 – Business
Nature
of operations
Western
Uranium Corporation (“Western” or the “Company”) was incorporated in December 2006 under the Ontario Business
Corporations Act. On November 20, 2014, the Company completed a listing process on the Canadian Securities Exchange (“CSE”).
As part of that process, the Company acquired 100% of the members’ interests of Pinon Ridge Mining LLC (“PRM”), a Delaware
limited liability company. The transaction constituted a reverse takeover (“RTO”) of Western by PRM. Subsequent to obtaining
appropriate shareholder approvals, the Company reconstituted its Board of Directors and senior management team. Effective September
16, 2015, Western completed its acquisition of Black Range Minerals Limited (“Black Range”) (
see Note 5)
.
The
Company has registered offices at 330 Bay Street, Suite 1400, Toronto, Ontario, Canada, M5H 2S8 and its common shares are listed
on the CSE under the symbol “WUC.” On April 22, 2016, the Company’s shares of common stock began trading on the
OTC Pink Open Market, and on May 23, 2016, the Company’s common stock was approved for the commencement of trading on the
OTCQX Best Market. Its principal business activity is the acquisition and development of uranium resource properties in the states
of Utah and Colorado in the United States of America (“United States”).
On
June 28, 2016, the Company’s registration statement became effective and Western became a United States reporting issuer.
Thereafter, the Company was approved for Depository Trust Company eligibility through the Depository Trust and Clearing Corporation,
which facilitates electronic book-entry delivery, settlement and depository services for shares in the United States.
Note
2 – Liquidity and going concern
The
Company has incurred continuing losses from its operations and as of December 31, 2017 the Company had an accumulated deficit
of $4,540,143 and a working capital deficiency of $444,125.
Since
inception, the Company has met its liquidity requirements principally through the issuance of notes and the sale of its shares
of common stock.
The
Company’s ability to continue its operations and to pay its obligations when they become due is contingent upon the Company
obtaining additional financing. Management’s plans include seeking to procure additional funds through debt and equity financings,
to secure regulatory approval to fully utilize its ablation technology and to initiate the processing of ore to generate operating
cash flows.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
2 – LIQUIDITY AND GOING CONCERN, CONTINUED
There
are no assurances that the Company will be able to raise capital on terms acceptable to the Company or at all, or that cash flows
generated from its operations will be sufficient to meet its current operating costs and required debt service. If the Company
is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned product development,
which could harm its financial condition and operating results, or it may not be able to continue to fund its ongoing operations
These conditions raise substantial doubt about the Company’s ability to continue as a going concern to sustain operations
for at least one year from the issuance of these financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
During
the year ended December 31, 2016, the Company raised USD $3,088,567 in net proceeds from the issuance of 2,655,764 units in private
placements. Each unit contained one common share and a warrant for the purchase of one common share with exercise prices ranging
from CAD $2.60 to CAD $3.50 (USD $2.05 to USD $2.77 as of December 31, 2017). The Company also issued broker warrants to purchase
shares of common stock (
see Note 10
).
During
the year ended December 31, 2017, the Company raised USD $1,437,396 in net proceeds from the issuance of 1,570,521 units in private
placements. Each unit contains one common share and a warrant for the purchase of one common share with exercise prices ranging
from CAD $1.40 to CAD $3.25 (USD $0.95 to USD $2.58 as of December 31, 2017) The Company also issued broker warrants to purchase
shares of common stock (
see Note 10
).
Note
3 – SUMMARY OF Significant Accounting Policies
Basis
of Presentation and Principles of Consolidation
These
consolidated financial statements are presented in United States dollars and have been prepared in accordance with United States
generally accepted accounting principles (“U.S. GAAP”).
The
accompanying consolidated financial statements include the accounts of Western and its wholly-owned subsidiaries, Western Uranium
Corporation (Utah), PRM, Black Range, Black Range Copper Inc., Ranger Resources Inc., Black Range Minerals Inc., Black Range Minerals
Colorado LLC, Black Range Minerals Wyoming LLC, Haggerty Resources LLC, Ranger Alaska LLC, Black Range Minerals Utah LLC, Black
Range Minerals Ablation Holdings Inc. and Black Range Development Utah LLC. All significant inter-company transactions and balances
have been eliminated upon consolidation.
The
Company has established the existence of mineralized materials for certain uranium projects. The Company has not established proven
or probable reserves, as defined by the United States Securities and Exchange Commission (the “SEC”) under Industry
Guide 7, through the completion of a “final” or “bankable” feasibility study for any of its uranium projects.
Exploration
Stage
In
accordance with U.S. GAAP, expenditures relating to the acquisition of mineral rights are initially capitalized as incurred while
exploration and pre-extraction expenditures are expensed as incurred until such time the Company exits the Exploration Stage by
establishing proven or probable reserves. Expenditures relating to exploration activities such as drill programs to search for
additional mineralized materials are expensed as incurred. Expenditures relating to pre-extraction activities such as the construction
of mine wellfields, ion exchange facilities and disposal wells are expensed as incurred until such time proven or probable reserves
are established for that uranium project, after which subsequent expenditures relating to mine development activities for that
particular project are capitalized as incurred.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
Note
3 – SUMMARY OF Significant Accounting Policies, Continued
Exploration
Stage, continued
Companies
in the Production Stage as defined under Industry Guide 7, having established proven and probable reserves and exited the Exploration
Stage, typically capitalize expenditures relating to ongoing development activities, with corresponding depletion calculated over
proven and probable reserves using the units-of-production method and allocated to future reporting periods to inventory and,
as that inventory is sold, to cost of goods sold. The Company is in the Exploration Stage which has resulted in the Company reporting
larger losses than if it had been in the Production Stage due to the expensing, instead of capitalizing, of expenditures relating
to ongoing mill and mine development activities. Additionally, there would be no corresponding amortization allocated to future
reporting periods of the Company since those costs would have been expensed previously, resulting in both lower inventory costs
and cost of goods sold and results of operations with higher gross profits and lower losses than if the Company had been in the
Production Stage. Any capitalized costs, such as expenditures relating to the acquisition of mineral rights, are depleted over
the estimated extraction life using the straight-line method. As a result, the Company’s consolidated financial statements
may not be directly comparable to the financial statements of companies in the Production Stage.
Use
of Estimates
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amount of assets and liabilities at the date of the financial statements and revenues and expenses during
the periods reported. By their nature, these estimates are subject to measurement uncertainty and the effects on the financial
statements of changes in such estimates in future periods could be significant. Significant areas requiring management’s estimates
and assumptions include determining the fair value of transactions involving common stock, assessment of the useful life and evaluation
for impairment of intangible assets, valuation and impairment assessments on mineral properties, deferred contingent consideration,
and the reclamation liability, valuation of stock-based compensation, valuation of available-for-sale securities and valuation
of long-term debt. Other areas requiring estimates include allocations of expenditures, depletion and amortization of mineral
rights and properties. Actual results could differ from those estimates.
Foreign
Currency Translation
The
reporting currency of the Company, including its subsidiaries, is the United States dollar. The financial statements of subsidiaries
located outside of the U.S. are measured in their functional currency, which is the local currency. The functional currency of
the parent (Western Uranium Corporation (Ontario)) is the Canadian dollar. Monetary assets and liabilities of these subsidiaries
are translated at the exchange rates at the balance sheet date. Income and expense items are translated using average monthly
exchange rates. Non-monetary assets are translated at their historical exchange rates. Translation adjustments are included in
accumulated other comprehensive loss in the consolidated balance sheets.
Segment
Information
The
Company determines its reporting units in accordance with FASB ASC 280, “
Segment Reporting
” (“ASC 280”).
The Company evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company then evaluates each
operating segment to determine if it includes one or more components that constitute a business. If there are components within
an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must
be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating
segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated. The
Company has one operating segment and reporting unit. The Company operates in one reportable business segment; the Company is
in the business of exploring, developing, mining and the production of its uranium and vanadium resource properties, including
the utilization of the Company’s ablation technology in its mining processes. The Company is organized and operated as one
business. Management reviews its business as a single operating segment, using financial and other information rendered meaningful
only by the fact that such information is presented and reviewed in the aggregate.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
Note
3 – SUMMARY OF Significant Accounting Policies, Continued
Cash
and Cash Equivalents
The
Company considers all highly-liquid instruments with an original maturity of three months or less at the time of issuance to be
cash equivalents. As of December 31, 2017 and 2016, the Company had no cash equivalents.
Marketable
Securities
The
Company classifies its marketable securities as available-for-sale securities, which are carried at their fair value based on
the quoted market prices of the securities with unrealized gains and losses reported as accumulated comprehensive income (loss),
a separate component of shareholders’ equity. Realized gains and losses on available-for-sale securities are included in
net earnings in the period earned or incurred.
Restricted
Cash
Certain
cash balances are restricted as they relate to deposits with banks that have been assigned to state reclamation authorities in
the United States to secure various reclamation guarantees with respect to mineral properties in Utah, Alaska and Colorado. As
these funds are not available for general corporate purposes and secure the long term reclamation liability
(see Note 6)
,
they have been separately disclosed and classified as long-term.
Revenue
Recognition
The
Company leases certain of its mineral properties for the exploration and production of oil and gas reserves. Lease payments received
in advance are deferred and recognized on a straight – line basis over the related lease term associated with the prepayment.
Royalty payments are recognized as revenues when received.
Fair
Values of Financial Instruments
The
carrying amounts of cash and cash equivalents, restricted cash, accounts payable, accrued liabilities, and notes payable approximate
their fair value due to the short-term nature of these instruments. Marketable securities are adjusted to fair value at each balance
sheet date based on quoted prices which are considered level 1 inputs. The reclamation deposits, which are reflected in restricted
cash on the consolidated balance sheets, are deposits mainly invested in certificates of deposit at major financial institutions
and their fair values were estimated to approximate their carrying values. The Company’s operations and financing activities are
conducted primarily in United States dollars and as a result, the Company is not subject to significant exposure to market risks
from changes in foreign currency rates. The Company is exposed to credit risk through its cash and restricted cash, but mitigates
this risk by keeping these deposits at major financial institutions.
ASC
820 “Fair Value Measurements and Disclosures” provides the framework for measuring fair value. That framework provides
a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and
the lowest priority to unobservable inputs (level 3 measurements).
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
Note
3 – SUMMARY OF Significant Accounting Policies, Continued
Fair
Values of Financial Instruments, continued
Fair
value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer
a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined
based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is
used to prioritize the inputs in measuring fair value as follows:
Level
1 Quoted prices in active markets for identical assets or liabilities.
Level
2 Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities
in markets that are not active, or other inputs that are observable, either directly or indirectly.
Level
3 Significant unobservable inputs that cannot be corroborated by market data.
The
fair value of financial instruments in the Company’s consolidated financial statements at December 31, 2017 and 2016 are
as follows:
|
|
Quoted Prices in
Active Markets
for Identical
Assets or
Liabilities
(Level 1)
|
|
|
Quoted Prices
for Similar
Assets or
Liabilities in
Active Markets
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Marketable securities as of December 31, 2017
|
|
$
|
3,123
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities as of December 31, 2016
|
|
$
|
2,976
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Mineral
Properties
Acquisition
costs of mineral properties are capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred
until such time the Company exits the Exploration Stage by establishing proven or probable reserves, as defined by the SEC under
Industry Guide 7, through the completion of a “final” or “bankable” feasibility study. Expenditures relating
to exploration activities are expensed as incurred and expenditures relating to pre-extraction activities are expensed as incurred
until such time proven or probable reserves are established for that project, after which subsequent expenditures relating to
development activities for that particular project are capitalized as incurred.
Where
proven and probable reserves have been established, the project’s capitalized expenditures are depleted over proven and
probable reserves upon commencement of production using the units-of-production method. Where proven and probable reserves have
not been established, such capitalized expenditures are depleted over the estimated production life upon commencement of extraction
using the straight-line method. The Company has not established proven or probable reserves for any of its projects.
The
carrying values of the mineral properties are assessed for impairment by management.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Impairment
of Long-Lived Assets
The
Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related
carrying amounts may not be recoverable. Impairment is considered to exist if the total estimated future cash flows on an undiscounted
basis are less than the carrying amount of the assets. An impairment loss is measured and recorded based on discounted estimated
future cash flows or upon an estimate of fair value that may be received in an exchange transaction. Future cash flows are estimated
based on estimated quantities of recoverable minerals, expected U3O8 prices (considering current and historical prices, trends
and related factors), production levels, operating costs of production and capital and restoration and reclamation costs, based
upon the projected remaining future uranium production from each project. The Company’s long-lived assets (which include
its mineral assets and ablation intellectual property) were acquired during the end of 2014 and in 2015 in arms-length transactions.
As of December 31, 2017, the Company evaluated the total estimated future cash flows on an undiscounted basis for its mineral
properties and ablation intellectual property and determined that no impairment was deemed to exist. Estimates and assumptions
used to assess recoverability of the Company’s long-lived assets and measure fair value of our uranium properties are subject
to risk uncertainty. Changes in these estimates and assumptions could result in the impairment of its long-lived assets. In estimating
future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent
of future cash flows from other asset groups.
Income
Taxes
The
Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income
taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of
taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of
the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected
to reverse.
The
Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than
not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation
of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s
opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates,
additional allowances or reversals of reserves may be necessary.
Tax
benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities.
The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized
upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s
tax returns that do not meet these recognition and measurement standards. As of December 31, 2017 and 2016, no liability for unrecognized
tax benefits was required to be reported.
The
Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component
of general and administrative expense. There were no amounts accrued for penalties and interest for the years ended December 31,
2017 and 2016. The Company does not expect its uncertain tax position to change during the next twelve months. Management is currently
unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.
The
Company has identified its federal tax return and its state tax returns in Colorado and Utah as its “major” tax jurisdictions,
and such returns for the years 2014 through 2017 remain subject to examination.
The
Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act reduces the U.S. federal corporate
tax rate from 35% to 21%. As of the completion of these consolidated financial statements and related disclosures, we have made
a reasonable estimate of the effects of the Tax Act. This estimate incorporates assumptions made based upon the Company’s
current interpretation of the Tax Act, and may change as the Company may receive additional clarification and implementation guidance
and as the interpretation of the Tax Act evolves. In accordance with SEC Staff Accounting Bulletin No. 118, the Company will finalize
the accounting for the effects of the Tax Act no later than the fourth quarter of 2018. Future adjustments made to the provisional
effects will be reported as a component of income tax expense in the reporting period in which any such adjustments are determined.
See Note 12 for additional information. Based on the new tax law that lowers corporate tax rates, the Company revalued its deferred
tax assets. Future tax benefits are expected to be lower, with the corresponding one time charge being recorded as a component
of income tax expense.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Restoration
and Remediation Costs (Asset Retirement Obligations)
Various
federal and state mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality
for its mine projects to the pre-existing mine area average quality after the completion of mining.
Future
reclamation and remediation costs, which include extraction equipment removal and environmental remediation, are accrued at the
end of each period based on management’s best estimate of the costs expected to be incurred for each project. Such estimates are
determined by the Company’s engineering studies which consider the costs of future surface and groundwater activities, current
regulations, actual expenses incurred, and technology and industry standards.
In
accordance with ASC 410, Asset Retirement and Environmental Obligations, the Company capitalizes the measured fair value of asset
retirement obligations to mineral properties. The asset retirement obligations are accreted to an undiscounted value until the
time at which they are expected to be settled. The accretion expense is charged to earnings and the actual retirement costs are
recorded against the asset retirement obligations when incurred. Any difference between the recorded asset retirement obligations
and the actual retirement costs incurred will be recorded as a gain or loss in the period of settlement.
At
each reporting period, the Company reviews the assumptions used to estimate the expected cash flows required to settle the asset
retirement obligations, including changes in estimated probabilities, amounts and timing of the settlement of the asset retirement
obligations, as well as changes in the legal obligation requirements at each of its mineral properties. Changes in any one or
more of these assumptions may cause revision of asset retirement obligations for the corresponding assets.
Deferred
Financing Costs
Deferred
financing costs represent costs incurred in connection with the issuance of debt. Once the associated debt instrument is issued,
these costs would be recorded as a debt discount and amortized to interest expense using the effective interest method over the
term of the related debt instrument. Upon the abandonment of a pending financing transaction, the related deferred financing costs
would be charged to general and administrative expense.
The
Company may also issue warrants or other equity instruments in connection with the issuance of debt instruments. The equity instruments
are recorded at their relative fair market value on the date of issuance which results in a debt discount which is amortized to
interest expense using the effective interest method.
Stock-Based
Compensation
The
Company follows ASC 718, Compensation - Stock Compensation, which addresses the accounting for stock-based payment transactions,
requiring such transactions to be accounted for using the fair value method. Awards of shares for property or services are recorded
at the more readily measurable of the fair value of the stock and the fair value of the service. The Company uses the Black-Scholes
option-pricing model to determine the grant date fair value of stock-based awards under ASC 718. The fair value is charged to
earnings depending on the terms and conditions of the award, and the nature of the relationship of the recipient of the award
to the Company. The Company records the grant date fair value in line with the period over which it was earned. For employees
and management, this is typically considered to be the vesting period of the award. For consultants the fair value of the award
is recorded over the term of the service period, and unvested amounts are revalued at each reporting period over the service period.
The Company estimates the expected forfeitures and updates the valuation accordingly.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Loss
per Share
Basic
net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during
the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential
common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the
exercise of stock options and warrants (using the treasury stock method). The computation of basic net loss per share for the
years ended December 31, 2017 and 2016 excludes potentially dilutive securities. The computations of net loss per share for each
period presented is the same for both basic and fully diluted.
Potentially
dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share because
the effect of their inclusion would have been anti-dilutive.
|
|
For the Year Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Warrants to purchase shares of common stock
|
|
|
4,095,563
|
|
|
|
2,655,764
|
|
Options to purchase shares of common stock
|
|
|
1,846,996
|
|
|
|
1,346,996
|
|
Total potentially dilutive securities
|
|
|
5,942,559
|
|
|
|
4,002,760
|
|
Note
4 – RECENT ACCOUNTING PRONOUNCEMENTS
In
May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue
from Contracts with Customers” (Topic 606) (“ASU 2014-09”), which supersedes the revenue recognition requirements
in ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. ASU No. 2014-09 is based on the principle
that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure
about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant
judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The amendments
in the ASU must be applied using one of two retrospective methods and are effective for annual and interim periods beginning after
December 15, 2016. On July 9, 2015, the FASB modified ASU 2014-09 to be effective for annual reporting periods beginning after
December 15, 2017, including interim periods within that reporting period. As modified, the FASB permits the adoption of the new
revenue standard early, but not before the annual periods beginning after December 15, 2016. A public organization would apply
the new revenue standard to all interim reporting periods within the year of adoption. In April 2016, the FASB issued ASU No.
2016-10 “Revenue from Contracts with Customers (Topic 606)”, “Identifying Performance Obligations and Licensing”
(“ASU 2016-10”). ASU 2016-10 clarifies the following two aspects of Topic 606: identifying performance obligations
and the licensing implementation guidance, while retaining the related principles for those areas. The provisions of this update
are effective for annual and interim periods beginning after December 15, 2017, with early application permitted. In May 2016,
the FASB issued Topic ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606)”, “Narrow-Scope Improvements
and Practical Expedients” (“ASU 2016-12”). The core principal of ASU 2016-12 is the recognition of revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. In December 2016, the FASB issued ASU No. 2016-20. “Technical
Corrections and Improvements to Topic 606. Revenue from Contracts with Customers”. This update is a comprehensive revenue
recognition standard that applies to all entities that have contracts with customers, except for those that fall within the scope
of other standards, such as insurance contracts. The amendment also clarifies narrow aspects of ASC 606 or corrects unintended
application of the guidance. The update is now effective for interim and annual reporting periods beginning after December 15,
2017. The Company has minimal revenues. The Company expects to implement ASU 2014-09 on January 1, 2018, pursuant to which it
will utilize the modified retrospective approach. The Company does not believe that ASU 2014-09 will have a material impact on
its consolidated financial position and results of operations.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
Note
4 – RECENT ACCOUNTING PRONOUNCEMENTS, continued
On
February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update will require organizations that lease assets to
recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The new guidance
will also require additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. The provisions
of this update are effective for annual and interim periods beginning after December 15, 2018. The Company is currently evaluating
the impact the adoption of this ASU will have on the Company’s consolidated financial position and results of operations.
In
June 2016 the FASB issued Topic ASU No. 2016-13 “Financial Instruments – Credit Losses: Measurement of Credit Losses
on Financial Instruments (Topic 326)” (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial
assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances
for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted
for annual and interim periods beginning after December 15, 2018. The Company is currently evaluating the impact the adoption
of this ASU will have on the Company’s consolidated financial position and results of operations.
In
August 2016 the FASB issued Topic ASU No. 2016-15 “Statement of Cash Flows (Topic 230) – Classification of Certain
Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 clarifies diversity in practice in how certain
cash receipts and cash payments are presented and classified in the statement of cash flows. The update to the standard is effective
for the Company beginning January 1, 2018, with early application permitted. The Company expects to adopt this ASU on January
1, 2018 and it does not expect it to have a material impact on its consolidated financial position and results of operations.
In
November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“
ASU
2016-18”).
ASU 2016-18 amends the classification
and presentation of changes in restricted cash or restricted cash equivalents in the statement of cash flows.
ASU
2016-18 is effective for the Company’s fiscal year beginning January 1, 2018. Early adoption is permitted.
The
Company expects to adopt this ASU on January 1, 2018 and it does not expect it to have a material impact on its consolidated financial
position and results of operations.
In
December 2016, the FASB issued ASU No. 2016-20. “Technical Corrections and Improvements to Topic 606. Revenue from Contracts
with Customers”. This update is a comprehensive revenue recognition standard that applies to all entities that have contracts
with customers, except for those that fall within the scope of other standards, such as insurance contracts. The amendment also
clarifies narrow aspects of ASC 606 or corrects unintended application of the guidance. The update is now effective for interim
and annual reporting periods beginning after December 15, 2017.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
Note
4 – RECENT ACCOUNTING PRONOUNCEMENTS, continued
In
January 2017, the FASB issued ASU No. 2017-01. “Business Combinations (Topic 805): Clarifying the Definition of a Business
(“ASU 2017-01”). ASU 2017-01 provides a more robust framework to use in determining when a set of assets and activities
is a business. Also the amendments provide more consistency in applying the guidance, reducing the costs of application, and make
the definition of a business more operable. The guidance is effective for public companies for annual periods beginning after
December 15, 2017, including interim periods within those periods. The Company expects to implement ASU 2017-01 on January 1,
2018, it expects that such implementation will not have a material impact on the Company’s consolidated financial position
and results of operations.
In
January 2017, the FASB issued ASU No. 2017-04. “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test
for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price
allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value,
not to exceed the carrying amount of goodwill. The ASU is effective for annual and interim impairment tests performed in periods
beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after
January 1, 2017. ASU No. 2017-04 will be effective for the Company as of January 1, 2020. The Company is currently evaluating
the impact that the adoption of this ASU will have on the Company’s consolidated financial statements and whether it may
be early adopted prior to the effective date.
In
May 2017, the FASB issued ASU No. 2017-09. “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.
The guidance provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance
in Topic 718, Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award.
The ASU is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, with early
adoption permitted. The Company expects to implement ASU 2017-01 on January 1, 2018, it expects that such implementation will
not have a material impact on the Company’s consolidated financial statements.
NOTE
5 - MINERAL ASSETS, ABLATION INTELLECTUAL PROPERTY AND OTHER PROPERTY
The Company’s mining properties acquired on August 18, 2014 that the Company retains as of December 31 2017, include: San
Rafael Uranium Project located in Emery County, Utah; The Sunday Mine Complex located in western San Miguel County, Colorado;
The Van 4 Mine located in western Montrose County, Colorado; The Sage Mine project located in San Juan County, Utah, and San Miguel
County, Colorado. These mining properties include leased land in the states of Colorado and Utah. None of these mining properties
were operational at the date of acquisition.
The
Company’s mining properties acquired on September 16, 2015 that the Company retains as of December 31, 2017, include Hansen,
North Hansen, High Park, Hansen Picnic Tree, and Taylor Ranch, located in Fremont and Teller Counties, Colorado. The Company also
acquired the Keota project located in Weld County, Wyoming and Ferris Haggerty located in Carbon County Wyoming. These mining
assets include both owned and leased land in the states of Utah, Colorado and Wyoming. All of the mining assets represent properties
which have previously been mined to different degrees for uranium.
As
the Company has not formally established proven or probable reserves on any of its properties, there is inherent uncertainty as
to whether or not any mineralized material can be economically extracted as originally planned and anticipated.
On
February 16, 2017, the Company’s Boyer Ranch lease reached its expiration date and the Company elected not to renew the
lease. The forfeiture of this lease has no material adverse impact on the fair value of the Company’s mineral properties
or its future plans.
On
September 16, 2015, in connection with the Company’s acquisition of Black Range, the Company assumed an option and exploration
agreement (the “Option and Exploration Agreement”) with STB Minerals, LLC, a Colorado limited liability company (“STB”).
The Option and Exploration Agreement gives the Company the right to purchase 51% of the mineral rights of specific areas of the
Hansen and Picnic Tree deposits (for which the Company already holds 49% of the rights). If the Company were to exercise its option
under the Option and Exploration Agreement, it would require the Company to (a) make a cash payment of $2,500,000 immediately
upon exercise; (b) issue shares of common stock to STB amounting to a value of $3,750,000 immediately upon exercise; and (c) issue
shares of common stock to STB amounting to a value of $3,750,000 on the date that is 180 days following exercise. The Option and
Exploration Agreement was scheduled to expire by its terms on July 28, 2017 if not exercised.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
5 - MINERAL ASSETS, ABLATION INTELLECTUAL PROPERTY AND OTHER PROPERTY, CONTINUED
The
Option and Exploration Agreement provided an extension for an “event of force majeure”. Under this clause, the
Company would receive an extension of the period during which it could exercise its option if it experiences an unreasonable delay
outside its control that prevents it from exercising the option. On May 10, 2017, the Company provided to STB a notice that
it was exercising the force majeure clause due to the delay by government regulators in licensing the Company’s ablation
technology and permitting mining at the Hansen property. STB has contested the Company’s finding that an event of force
majeure has occurred. Ongoing negotiations continued until September 21, 2017 when the Company and STB agreed to settle the matter
through the pre-established arbitration mechanism. Prior to the commencement of arbitration, a settlement was agreed to on February
28, 2018 through the execution of an Amendment of Option and Exploration Agreement. As consideration, the Company paid STB a $20,000
extension payment and granted STB the right to seek a bona fide written offer over the remaining term, and agreed to the removal
of the force majeure clause from the agreement. The Company received an extension until July 28, 2019 and a right of first refusal
to match any bona fide written offer. Hence the Company already owns 49% of the resource property and retains an option to purchase
the 51% of the resource property that the Company does not already own for the duration of the agreement. Further the Company
believes the execution of this agreement is without financial implications, and as such, the Company has not made any adjustment
to these consolidated financials related to this matter.
A
prior owner of the Van 4 Mine had been granted a first Temporary Cessation from reclamation of the mine by the Colorado Mined
Land Reclamation Board (“MLRB”) which was set to expire June 23, 2017. Prior to its expiration, PRM formally requested
an extension through a second Temporary Cessation. PRM subsequently, participated in a public process which culminated in a hearing
on July 26, 2017. Prior to the hearing, three non-profit organizations who pursue environmental and conservation objectives filed
a brief objecting to the extension. The MLRB board members voted to grant a second five-year Temporary Cessation for the Van 4
Mine. Thereafter the three objecting parties filed a lawsuit on September 18, 2017. The MLRB was named as the defendant and PRM
was named as a party to the case due to the Colorado law requirement that any lawsuit filed after a hearing include all of the
parties to the proceeding. The plaintiff organizations are seeking for the court to set aside the board order granting a second
five-year Temporary Cessation period to PRM for the Van 4 Mine. The Colorado state Attorney General is defending this action which
is pending in the Denver Colorado District Court. As a party to this action neither the Company, nor its wholly owned subsidiary,
PRM has taken any action and is monitoring this lawsuit.
The
Company’s mineral properties and ablation intellectual property are:
|
|
As of December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Mineral properties
|
|
$
|
11,645,218
|
|
|
$
|
11,645,218
|
|
Ablation intellectual property
|
|
$
|
9,488,051
|
|
|
$
|
9,488,051
|
|
Oil
and Gas Lease
On
July 18, 2017, an oil and gas lease became effective with respect to minerals and mineral rights owned by of the Company of approximately
160 surface acres of the Company’s property in Colorado. As consideration for entering into the lease, the Company received
$120,000 during the third quarter of 2017. The lease will be in force for an initial term of three years and may be extended by
the lessee at 150% of the initial rate. The lessee has also agreed to pay the Company a royalty of 18.75% of the lessee’s
revenue attributed to oil and gas produced, saved, and sold attributable to the net mineral interest.
The
$120,000 will be recognized as revenue incrementally over the term of the lease. The Company recognized $20,000 and $0 of revenue
during the years ended December 31, 2017 and 2016, respectively.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
5 - MINERAL ASSETS, ABLATION INTELLECTUAL PROPERTY AND OTHER PROPERTY, CONTINUED
Reclamation
Liabilities
The
Company’s mines are subject to certain asset retirement obligations, which the Company has recorded as reclamation liabilities.
The reclamation liabilities of the United States mines are subject to legal and regulatory requirements, and estimates of the
costs of reclamation are reviewed periodically by the applicable regulatory authorities. The reclamation liability represents
the Company’s best estimate of the present value of future reclamation costs in connection with the mineral properties.
The Company determined the gross reclamation liabilities of the mineral properties as of December 31, 2017 and, 2016 to be approximately
$1,036,333. During the years ended December 31, 2017 and 2016, the accretion of the reclamation liabilities was $9,158 and $183,510,
respectively. The Company expects to begin incurring the reclamation liability after 2054 and accordingly, has discounted the
gross liabilities over their remaining lives using a discount rate of 5.4% to net discounted aggregated values as of December
31, 2017 and 2016 of $196,821 and $403,639, respectively. The gross reclamation liabilities as of December 31, 2017 are secured
by certificates of deposit in the amount of $1,036,410.
During
the second quarter of 2016, the Company initiated actions to cancel its coal mining leases in Alaska. In connection therewith,
the Company notified the state of Alaska of its intent to forfeit the posted bond in satisfaction of the reclamation liabilities
at the site. In response to the Company’s notification, the Company received notification that the state of Alaska was initiating
forfeiture of the Company’s performance bond for reclamation. However, the notice indicated an additional surety bond of
$150,000 in excess of the $210,500 cash bond which had been posted by the Company upon purchase of the property. The Company and
its advisors do not believe that it is obligated for this additional amount of claimed reclamation obligation. The Company is
working with its legal counsel and the State of Alaska to resolve this matter. The Company has not recorded an additional $150,000
obligation as the Company does not expect, based on the advice of legal counsel, to be obligated to an amount greater than that
presently reflected in the reclamation liability. On January 20, 2017, the state of Alaska notified the Company that its reclamation
bond had been forfeited and that it was unlikely that any additional amount would be due to Alaska pursuant to the Company’s
reclamation obligations and since January 20, 2017, the Company has received no further communications. On December 31, 2017,
the Company wrote off the reclamation liability related to this property and the related bond, as the Company does not expect
that the obligation to remediate will be in excess of the value of the bond.
Reclamation
liability activity consists of:
|
|
For the years ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Beginning balance
|
|
$
|
403,639
|
|
|
$
|
220,129
|
|
Accretion
|
|
|
9,158
|
|
|
|
183,510
|
|
Write-off of Alaska reclamation liability
|
|
|
(215,976
|
)
|
|
|
-
|
|
Ending Balance
|
|
$
|
196,821
|
|
|
$
|
403,639
|
|
|
|
|
|
|
|
|
|
|
Less current portion
|
|
|
-
|
|
|
|
215,976
|
|
Non-current portion
|
|
$
|
196,821
|
|
|
$
|
187,663
|
|
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
6 - Accounts Payable and Accrued Liabilities
Accounts
payable and accrued liabilities consisted of:
|
|
As of December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Trade accounts payable
|
|
$
|
453,618
|
|
|
$
|
547,254
|
|
Accrued liabilities
|
|
|
148,398
|
|
|
|
222,653
|
|
|
|
$
|
602,016
|
|
|
$
|
769,907
|
|
NOTE
7
- Notes Payable
EFHC
Note
On
August 18, 2014, in connection with the purchase of certain of the mineral properties, the Company entered into a note payable
with Energy Fuels Holding Corporation (“EFHC”) (the “EFHC Note”) for $500,000. The EFHC Note bears interest
at a rate of 3.0% per annum and is secured by a first priority interest in certain of the Company’s mineral properties.
On the date of the purchase, the Company recorded the EFHC Note net of a discount for interest of $73,971 at a rate of 4% per
annum, resulting in a total effective interest rate of 7% per annum. The discount is being amortized using the effective interest
method over the life of the loan. All principal on the EFHC Note is due and payable on August 18, 2018 and interest on the EFHC
Note is due and payable annually beginning August 18, 2015.
Nueco
Note
On
August 18, 2014, also in connection with the purchase of the mining properties, the Company entered into a Note Assumption Agreement
with EFHC and Nuclear Energy Corporation (“Nueco”), whereby the Company assumed all of the obligations of EFHC under
its note payable with Nueco (the “Nueco Note”). The Nueco Note bears no stated interest rate and is secured by certain
of the Company’s mining assets. On the date of the purchase, the Company recorded the Nueco Note net of a discount for interest
of $23,724 at a rate of 7% per annum. The discount is being amortized using the effective interest method over the life of the
loan. The Nueco Note payment due on December 20, 2014 in the amount of $250,180 was made on January 5, 2015 without penalty other
than additional interest at 6% per annum. As of December 31, 2015, the Nueco Note had a remaining obligation outstanding of $250,180,
the due date of which was extended to January 13, 2016. In connection with the extension, the Company agreed to add interest from
the date of October 13, 2015 until the date paid at the annual rate of one percent (1%) per annum.
On
February 8, 2016, the Company and the lender agreed to further extend the maturity of the Nueco Note to June 2016. In consideration
for the extension the Company increased the principal amount by 10% (or $25,384), increased the interest rate to 6% per annum
and paid a $5,000 fee that did not reduce the interest or principal. On June 20, 2016, the Company further extended the maturity
of the Nueco Note to July 31, 2016. In consideration for the extension, the Company paid a $5,000 fee that did not reduce the
interest or principal on the Nueco Note.
On
August 8, 2016, accrued interest was paid in the amount of $13,477. On August 16, 2016, the Company further extended the maturity
of the Nueco Note to November 16, 2016. In consideration for the extension, the Company paid a fee of $10,000 which did not reduce
the interest or principal on the Nueco Note. Further, a principal payment of $90,000 was made on August 23, 2016, which reduced
the outstanding principal amount to $185,564. The August 16, 2016 extension was accounted for as a modification, and as such,
the extension fees were accounted for as additional debt discount and were amortized over the remaining extended term of the note.
On
November 29, 2016, the Company and the lender agreed to further extend the maturity of the Nueco Note to January 31, 2017. In
consideration for the extension, the Company paid a $5,000 fee that did not reduce the principal or interest on the Nueco Note.
The Company also made a payment of $5,155, which represented interest on the Nueco Note through January 31, 2017.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
7
- Notes Payable, continued
Nueco
Note, Continued
On
February 1, 2017, the Company and lender agreed to further extend the maturity of the Nueco Note to the earlier of (a) five days
after the next closing of a private placement; or (b) April 15, 2017. In consideration for the extension, the Company paid to
the lender a payment in the amount of $100,000 which represented (i) a principal reduction of $85,564; (ii) $1,186 for a prepayment
of interest through April 15, 2017; and (iii) a payment of $13,250 which is a fee which does not reduce the principal or interest
on the Nueco Note.
On
March 31, 2017, the Company repaid the Nueco Note in full.
Siebels
Note
On
February 22, 2016, the Company entered into a note payable with Siebels Hard Assets Fund, Ltd. for $100,000. The note bore interest
at a rate of 18.0% per annum and matured on April 22, 2016. On April 28, 2016, the Company repaid this note in full.
Notes
Payable Summary
Notes
payable consisted of:
|
|
As of December 31, 2017
|
|
|
|
Principal
|
|
|
Discount
|
|
|
Balance, Net
of Discount
|
|
|
Current
|
|
|
Non-Current
|
|
EFHC Note
|
|
$
|
500,000
|
|
|
$
|
12,550
|
|
|
$
|
487,450
|
|
|
$
|
487,450
|
|
|
$
|
-
|
|
Total
|
|
$
|
500,000
|
|
|
$
|
12,550
|
|
|
$
|
487,450
|
|
|
$
|
487,450
|
|
|
$
|
-
|
|
|
|
As of December 31, 2016
|
|
|
|
Principal
|
|
|
Discount
|
|
|
Balance, Net
of Discount
|
|
|
Current
|
|
|
Non-Current
|
|
EFHC Note
|
|
$
|
500,000
|
|
|
$
|
31,632
|
|
|
$
|
468,368
|
|
|
$
|
-
|
|
|
$
|
468,368
|
|
Nueco Note
|
|
|
185,564
|
|
|
|
2,439
|
|
|
|
183,125
|
|
|
|
183,125
|
|
|
|
-
|
|
Total
|
|
$
|
685,564
|
|
|
$
|
34,071
|
|
|
$
|
651,493
|
|
|
$
|
183,125
|
|
|
$
|
468,368
|
|
The
Company’s total interest expense, net, consisted of:
|
|
For the Years Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Interest expense, notes payable
|
|
$
|
17,162
|
|
|
$
|
71,301
|
|
Amortization of discount on notes payable
|
|
|
34,771
|
|
|
|
51,316
|
|
Accretion of reclamation liabilities
|
|
|
9,158
|
|
|
|
183,510
|
|
Other interest expense
|
|
|
1,074
|
|
|
|
-
|
|
Interest income
|
|
|
(1,933
|
)
|
|
|
(4,138
|
)
|
Interest expense, net
|
|
$
|
60,232
|
|
|
$
|
301,989
|
|
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
8 - MORTGAGE
In
connection with the acquisition of Black Range, Western assumed a mortgage secured by land, building and improvements at 1450
North 7 Mile Road, Casper, Wyoming, with interest payable at 8.00% and payable in monthly payments of $11,085 with the final balance
of $1,044,015 due as a balloon payment on January 16, 2016. The Company did not make the final balloon payment as scheduled. On
May 26, 2016, the Company executed agreements with the mortgage holder whereby in an equal exchange the mortgage was exchanged
for the land, building and improvements with which it was secured, and pursuant to which no future financial consideration is
required.
NOTE
9 – COMMITMENTS
George
Glasier
On
February 8, 2017, the Company entered into an employment agreement with George Glasier, its Chief Executive Officer. The employment
agreement provides for an initial term of January 1, 2017 through December 31, 2018, with automatic annual renewals unless the
Company or the Chief Executive Officer were to provide 90 days written notice of their desire to not renew the agreement. The
employment agreement provides for a base salary of $180,000 per annum and a discretionary annual cash bonus to be determined by
the Company’s Board of Directors. Pursuant to the employment agreement, if the Company terminates the employment agreement
without cause, or if a change of control occurs, the Company is required to pay to the Chief Executive Officer a lump sum payment
equal to two and one-half times his annual base salary.
Russell
Fryer
On
July 28, 2017, Russell Fryer was appointed the Company’s Executive Chairman. On November 13, 2017, the Company entered into a
consulting agreement with an affiliate of Mr. Fryer. The agreement became effective on July 28, 2017 and, pursuant to its terms,
expires on December 31, 2018. The agreement may be terminated by either party with 90 days’ notice. The agreement provides
for compensation of $15,000 per month and an annual bonus at the discretion of the Board of Directors. Pursuant to the agreement,
if a change of control occurs wherein the consideration in such change of control is more than USD $2.00 per share, the Company
is required to pay a lump sum in the amount of two and one-half times the entity’s annual fee to this entity. On January
29, 2018, the Company provided the requisite 90-day notification to terminate the consulting agreement, effective April 30, 2018.
This was initiated pursuant to a proposed board review and restructuring of the service portion of the consulting agreement outside
of the director and board chairman roles. As of March 30, 2018, the proposed board review has not yet been undertaken.
Robert
Klein
On
October 19, 2016, Robert Klein was appointed to serve as Chief Financial Officer of the Company, replacing Andrew Wilder. Mr.
Wilder has continued to serve as a director of the Company. On October 1, 2016, Western entered into a consulting agreement
with Bedford Bridge Fund LLC (“Bedford Bridge”) and Robert Klein, pursuant to which Western retained Bedford Bridge
to provide financial operating services for the Company and retained Mr. Klein to serve as Chief Financial Officer of the Company,
both subject to Board approval. On March 26, 2017, the Company provided notice that it would be cancelling this agreement, effective
April 30, 2017. On October 4, 2016, Mr. Klein was granted an option to purchase 100,000 shares of our common stock at an exercise
price of CAD $2.50 per share which expires five years from the date of issuance. These options vest in thirds in equal installments
on the date of grant, October 31, 2016 and March 31, 2017.
On
May 12, 2017, the Company entered into an engagement agreement with Robert Klein to continue his service as the Company’s
Chief Financial Officer. . The engagement agreement provided for an initial term of May 1, 2017 through June 30, 2017. The May
12, 2017 engagement agreement provided for a base salary of $12,500 per month.
On
August 1, 2017, the Company entered into an engagement agreement to extend the initial May 12, 2017 agreement with Mr. Klein.
The August 1, 2017 agreement extended the term of the agreement to provide for a term of July 1, 2017 through September 30, 2017
and provided for a base salary of $8,000 per month. This agreement expired on September 30, 2017.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
9 – COMMITMENTS, continued
Robert
Klein, continued
On
November 13, 2017, the Company entered into an employment agreement with Mr. Klein. The agreement became effective on October
1, 2017 and expires on September 30, 2018. The agreement may be mutually extended for subsequent annual terms. The agreement provides
for compensation of $120,000 per annum and an annual bonus at the discretion of the Board of Directors. Pursuant to the employment
agreement, once the Company raises a cumulative USD $1,000,000 subsequent to October 1, 2017, Mr. Klein’s annual base salary
shall be increased. If a change of control occurs wherein the consideration in such change of control is more than USD $2.00 per
share, the Company is required to pay a lump sum to Mr. Klein in the amount of two and one-half times Mr. Klein’s annual
salary.
NOTE
10 - SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS
Authorized
Capital
The
holders of the Company’s common stock are entitled to one vote per share. Holders of common stock are entitled to receive
ratably such dividends, if any, as may be declared by the board of directors out of legally available funds. Upon the liquidation,
dissolution, or winding up of the Company, holders of common stock are entitled to share rateably in all assets of the Company
that are legally available for distribution. As of December 31, 2017 and 2016, an unlimited number of common shares were authorized
for issuance.
Shares
Issued for Accounts Payable
On
February 7, 2017, the Company issued 53,788 shares of its common stock in exchange for approximately $83,338 of its accounts payable
outstanding with certain creditors.
Private
Placements
On
January 4, 2016, the Company completed a private placement raising gross proceeds of CAD $300,000 (USD $216,534) through the subscription
for 101,009 common shares at a price of CAD $2.97 (USD $2.14) per common share, and warrants to purchase an aggregate of 101,009
common shares at an exercise price of CAD $3.50 (USD $2.60 as of December 31, 2016). The warrants are exercisable immediately
upon issuance and have a term of five years. Of the total amount received, CAD $275,000 (USD $198,298) was received in December
of 2015 while the remainder CAD $25,000 (USD $18,236) was received in the three months ended March 31, 2016. As of December 31,
2015, the Company accounted for the proceeds of $198,298 as subscriptions payable.
During
April 2016, the Company initiated a private placement offering for the sale of units of its securities for a price per unit of
CAD $1.70 (USD $1.34). Each unit consisted of one share of the Company’s common stock and one warrant to purchase a share
of common stock at CAD $2.60 (USD $1.93 as of December 31, 2016) per share, with a term of five years. During April and May 2016
the Company raised gross and net proceeds of CAD $791,090 (USD $622,174) through the issuance of 465,347 units.
On
September 2, 2016 the Company completed a private placement issuing 1,078,458 units at CAD $1.70 (USD $1.32) per unit for total
gross proceeds of CAD $1,833,378 (USD $1,423,618) and net proceeds of CAD $1,830,029 (USD $1,407,841). Each unit consisted of
one common share of the Company and one warrant at an exercise price of CAD $2.80 (USD $2.08 as of December 31, 2016) which expire
five years after the date of issuance.
During
December 2016, the Company completed a private placement and issued 1,010,950 units at CAD $1.20 (USD $.90) per unit for total
gross proceeds of CAD $1,213,140 (USD $909,855) and total net proceeds of CAD $1,129,922 (USD $870,447). Each unit consisted of
one common share of the Company and one warrant at an exercise price of CAD $2.80 (USD $2.08 as of December 31, 2016) which expires
five years after the date of issuance. In connection with this private placement, the Company issued 40,276 broker warrants with
identical terms to the warrants included in the units issued in the private placement.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
10 - SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS, CONTINUED
Private
Placements, continued
On
March 31, 2017, the Company completed a private placement of 634,424 units at a price of CAD $1.75 (USD $1.35) per unit for gross
proceeds of CAD $1,110,263 (USD $835,805) and net proceeds of CAD $1,066,223 (USD $801,160). Each unit consisted of one share
of the Company’s common stock and a warrant for the purchase of one share of the Company’s common stock. Each warrant
is immediately exercisable at a price of CAD $3.25 and expires five years from the date of issuance.
On
September 15, 2017, the Company completed a private placement of 509,763 units at a price of CAD $0.90 (USD $0.74) per unit for
gross proceeds of CAD $458,787 (USD $376,022) and net proceeds of CAD $418,880 (USD $343,105). Each unit consisted of one share
of common stock and one warrant. Each warrant is immediately exercisable at a price of CAD $1.40 and expires five years from the
date of issuance. The Company also issued broker warrants to purchase 21,751 shares of common stock at a price of CAD $1.40 per
common share, which expire two years from the date of issuance.
On
December 29, 2017, the Company completed a private placement of 426,334 units at a price of CAD $0.90 (USD $0.72) per unit for
gross proceeds of CAD $383,071 (USD $305,918) and net proceeds of CAD $367,059 (USD $293,131). Each unit consisted of one share
of common stock and a warrant to purchase one half of one share of common stock. Each warrant is immediately exercisable at a
price of CAD $1.50 and expires two years from the date of issuance. The Company also issued broker warrants to purchase 9,310
shares of common stock at a price of CAD $1.50 per common share, which expire two years from the date of issuance.
Incentive
Stock Option Plan
The
Company maintains an Incentive Stock Option Plan (the “Plan”) that permits the granting of stock options as incentive
compensation. Shareholders of the Company approved the Plan on June 30, 2008 and amendments to the Plan on June 20, 2013, and
the Board of Directors approved additional changes to the Plan on September 12, 2015.
The
purpose of the Plan is to attract, retain and motivate directors, management, staff and consultants by providing them with the
opportunity, through stock options, to acquire a proprietary interest in the Company and benefit from its growth.
The
Plan provides that the aggregate number of common shares for which stock options may be granted will not exceed 10% of the issued
and outstanding common shares at the time stock options are granted. As of December 31, 2017, a total of 20,510,000 common shares
were outstanding, and at that date the maximum number of stock options eligible for issue under the Plan was 2,051,000. At December
31, 2016, a total of 18,886,497 common shares were outstanding, and at that date the maximum number of stock options eligible
for issue under the Plan was 1,888,650 (10% of the issued and outstanding common shares).
Acquisition
of Common Shares
During
the three months ended September 30, 2017, the Company received into treasury an aggregate of 306 common shares from two shareholders
for no consideration. The Company has included these shares in Treasury Shares on its consolidated balance sheets.
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
10 - SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS, CONTINUED
Stock
Option Grants
On
October 4, 2016, the Company granted options under the Plan for the purchase of an aggregate of 1,075,000 shares of common stock
to ten individuals consisting of officers, consultants, directors and employees of the Company. The options have a five year term,
an exercise price of CAD $2.50 (USD $1.97 as of December 31, 2017), and vest equally in thirds commencing initially on the date
of grant and thereafter on October 31, 2016, and March 31, 2017.
On
October 6, 2017, the Company granted options under the Plan for the purchase of an aggregate of 825,000 shares of common stock
to five individuals consisting of directors and officers of the Company. The options have a five year term, an exercise price
of CAD $1.60 (USD $1.26 as of December 31, 2017), and vest equally in thirds commencing initially on the date of grant and thereafter
on October 31, 2017, and March 31, 2018.
Stock
Options
|
|
Number of Shares
|
|
|
Weighted Average Exercise Price
|
|
|
Weighted Average Contractual Life (years)
|
|
|
Weighted Average Grant Date Fair Value
|
|
|
Intrinsic Value
|
|
Outstanding - January 1, 2017
|
|
|
1,346,996
|
|
|
$
|
2.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
825,000
|
|
|
$
|
1.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired, forfeited, or cancelled
|
|
|
(325,000
|
)
|
|
$
|
1.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding December 31, 2017
|
|
|
1,846,996
|
|
|
$
|
1.92
|
|
|
|
4.11
|
|
|
$
|
0.42
|
|
|
$
|
-
|
|
Exercisable, December 31, 2017
|
|
|
1,571,996
|
|
|
$
|
2.06
|
|
|
|
4.11
|
|
|
$
|
0.46
|
|
|
$
|
-
|
|
The
Company’s stock based compensation expense related to stock options for the years ended December 31, 2017 and 2016 was $209,435
and $152,322, respectively. As of December 31, 2017, the Company had $19,038 in unamortized stock option expense, which will be
amortized over a period of 0.25 years.
The
Company utilized the Black-Scholes option pricing model to determine the fair value of these stock options, using the assumptions
as outlined below.
|
|
For the Year Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Stock Price
|
|
$
|
1.05
|
|
|
$
|
1.74
|
|
Exercise Price
|
|
$
|
1.60
|
|
|
$
|
1.90
|
|
Number of Options Granted
|
|
|
825,000
|
|
|
|
1,075,000
|
|
Dividend Yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected Volatility
|
|
|
52
|
%
|
|
|
75
|
%
|
Weighted Average Risk-Free Interest Rate
|
|
|
1.64
|
%
|
|
|
1.22
|
%
|
Expected life (in years)
|
|
|
2.59
|
|
|
|
2.59
|
|
Warrants
|
|
Number of Shares
|
|
|
Weighted Average Exercise Price
|
|
|
Weighted Average Contractual Life (years)
|
|
|
Intrinsic Value
|
|
Outstanding, January 1, 2017
|
|
|
2,696,040
|
|
|
$
|
2.08
|
|
|
|
|
|
|
|
|
|
Issued
|
|
|
1,399,523
|
|
|
$
|
1.80
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2017
|
|
|
4,095,563
|
|
|
$
|
2.27
|
|
|
|
3.70
|
|
|
$
|
-
|
|
Exercisable, December 31, 2017
|
|
|
4,095,563
|
|
|
$
|
2.27
|
|
|
|
3.70
|
|
|
$
|
-
|
|
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
Note
11 - Mining Expenditures
|
|
For the Year Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Permits
|
|
$
|
132,183
|
|
|
$
|
127,430
|
|
Maintenance
|
|
|
8,706
|
|
|
|
238,047
|
|
Contract Labor
|
|
|
8,575
|
|
|
|
7,805
|
|
Royalties
|
|
|
5,260
|
|
|
|
16,550
|
|
|
|
$
|
154,724
|
|
|
$
|
389,832
|
|
NOTE
12 - INCOME TAXES
The
tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities
are as follows:
|
|
As of December 31,
|
|
Deferred tax assets:
|
|
2017
|
|
|
2016
|
|
Net operating loss carryovers
|
|
$
|
3,651,732
|
|
|
$
|
4,729,737
|
|
Marketable securities
|
|
|
15,471
|
|
|
|
23,473
|
|
Accrued expenses
|
|
|
44,059
|
|
|
|
91,925
|
|
Deferred tax assets, gross
|
|
|
3,711,262
|
|
|
|
4,845,135
|
|
|
|
|
|
|
|
|
|
|
Less: valuation allowance
|
|
|
(1,512,585
|
)
|
|
|
(1,578,784
|
)
|
Deferred tax assets, net
|
|
|
2,198,677
|
|
|
|
3,266,351
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
(4,907,564
|
)
|
|
|
(7,329,681
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets (liabilities), net
|
|
$
|
(2,708,887
|
)
|
|
$
|
(4,063,330
|
)
|
The
change in the Company’s valuation allowance is as follows:
|
|
For the Years Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Beginning of year
|
|
$
|
1,578,784
|
|
|
$
|
531,983
|
|
(Decrease) increase in valuation allowance
|
|
|
(66,199
|
)
|
|
|
1,046,801
|
|
End of year
|
|
$
|
1,512,585
|
|
|
$
|
1,578,784
|
|
A
reconciliation of the provision for income taxes with the amounts computed by applying the statutory Federal income tax rate to
income from operations before the provision for income taxes is as follows:
|
|
For the Years Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
U.S. federal statutory rate
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
State and foreign taxes
|
|
|
(3.2
|
)%
|
|
|
(3.2
|
)%
|
Permanent differences
|
|
|
|
|
|
|
|
|
Non-deductible expenses
|
|
|
2.9
|
%
|
|
|
2.7
|
%
|
Valuation allowance
|
|
|
(3.7
|
)%
|
|
|
48.1
|
%
|
Change in federal tax rate
|
|
|
(33.3
|
)%
|
|
|
-
|
%
|
True-up of prior year deferred tax assets
|
|
|
(4.1
|
)%
|
|
|
(13.6
|
)%
|
Effective income tax rate
|
|
|
(75.4
|
)%
|
|
|
0.0
|
%
|
WESTERN URANIUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(Stated in $USD)
NOTE
12 - INCOME TAXES, CONTINUED
The
Company has net operating loss carryovers of approximately $14,724,726 for federal and state income tax purposes, which begin
to expire in 2026. The ultimate realization of the net operating loss is dependent upon future taxable income, if any, of the
Company. Based on losses from inception, the Company determined that as of December 31, 2017 it is more likely than not that the
Company will not realize benefits from the deferred tax assets. The Company will not record income tax benefits in the financial
statements until it is determined that it is more likely than not that the Company will generate sufficient taxable income to
realize the deferred income tax assets. As a result of the analysis, the Company determined that a valuation allowance against
the deferred tax assets was required of $1,512,585 and $1,578,784 as of December 31, 2017 and 2016, respectively.
Internal
Revenue Code (“IRC”) Section 382 imposes limitations on the use of net operating loss carryovers when the stock ownership
of one or more 5% stockholders (stockholders owning 5% or more of the Company’s outstanding capital stock) has increased
on a cumulative basis over a period of three years by more than 50 percentage points. Management cannot control the ownership
changes occurring. Accordingly, there is a risk of an ownership change beyond the control of the Company that could trigger a
limitation of the use of the loss carryover. The Company has analyzed the issuances of shares of common stock during the years
ended December 31, 2017 and 2016 and does not believe such change of control occurred. If such ownership change under IRC section
382 had occurred, such change would substantially limit the Company’s ability in the future to utilize its net operating
loss carryforwards
NOTE
13 - Related Party Transactions (Including Key Management Compensation)
The
Company has transacted with related parties pursuant to service arrangements in the ordinary course of business, as follows:
Entities
controlled by a former member of the Board of Directors earned consulting fees totaling $64,715 and $47,660 for the years ended
December 31, 2017 and 2016, respectively. The same former director earned director fees totaling $8,356 and $3,021 during the
years ended December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, the Company has $1,300 and $0, respectively,
in accounts payable and accrued liabilities owing to this director. This director resigned on July 27, 2017.
Pursuant
to a consulting agreement, a United States limited liability company owned by a person who is a director and until October 19,
2016, was the Company’s CFO, entered into a contract with the Company dated January 1, 2016, (” the January 2016 Agreement”)
to provide financial and other consulting services at $8,333 per month. On October 19, 2016 the January 2016 Agreement was terminated.
On the same date a new agreement was entered into between the Company, a United States limited liability company owned by the
same director and Robert Klein (the “October 2016 Agreement”) to provide financial operating services and to have
Mr. Klein serve as the Chief Financial Officer. The term of the October 2016 Agreement was to run through July 31, 2017 and has
an annual fee of $162,000 payable monthly, starting on October 1, 2016. On March 26, 2017, the Company provided notice that it
would be cancelling the October 2016 Agreement, effective April 30, 2017. The acknowledgement of the termination initiated the
preparation of Mr. Klein’s engagement agreement as described in Note 8. During the years ended December 31, 2017 and 2016,
the Company incurred fees of $89,049 and $94,351, respectively, to these companies. At December, 2017 and 2016, the Company had
$0 and $0, included in accounts payable and accrued liabilities payable to these companies.
Prior
to the acquisition of Black Range, Mr. George Glasier, the Company’s CEO, who is also a director, transferred his interest
in a former joint venture with Ablation Technologies, LLC to Black Range. In connection with the transfer, Black Range issued
25 million shares of Black Range common stock to Seller and committed to pay AUD $500,000 (USD $390,350) to Seller within 60 days
of the first commercial application of the ablation technology. Western assumed this contingent payment obligation in connection
with the acquisition of Black Range. At the date of the acquisition of Black Range, this contingent obligation was determined
to be probable. Since the deferred contingent consideration obligation is probable and the amount estimable, the Company recorded
the deferred contingent consideration as an assumed liability in the amount of $390,350 and $372,000 as of December 31, 2017 and
2016, respectively.
Exhibit 31.1
CERTIFICATION
PURSUANT TO RULE 13a-14 AND 15d-14
UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED
I, George Glasier, certify that:
1. I have reviewed this annual report on
Form 10-K of Western Uranium Corporation;
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 registrant as of, and for, the periods presented in this report;
4. The registrant’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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant 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 registrant, 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 consolidated interim
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the
registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying
officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial
reporting.
Date: April 2, 2018
|
By:
|
/s/ George Glasier
|
|
Name:
|
George Glasier
|
|
Title:
|
Chief Executive Officer, President, and Director
(Principal Executive Officer)
|
Exhibit 31.2
CERTIFICATION
PURSUANT TO RULE 13a-14 AND 15d-14
UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED
I, Robert Klein, certify that:
1. I have reviewed this annual report on
Form 10-K of Western Uranium Corporation;
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 registrant as of, and for, the periods presented in this report;
4. The registrant’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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant 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 registrant, 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 consolidated interim
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the
registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying
officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial
reporting.
Date: April 2, 2018
|
By:
|
/s/ Robert Klein
|
|
Name:
|
Robert Klein
|
|
Title:
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
In connection with the Annual Report of
Western Uranium Corp. on Form 10-K for the annual period ended December 31, 2017 as filed with the Securities and Exchange Commission
on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby 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 fully complies with the requirements
of Section 13(a) or 15(d) 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 operation
of the Company.
Dated: April 2, 2018
|
By:
|
/s/ George Glasier
|
|
Name:
|
George Glasier
|
|
Title:
|
Chief Executive Officer
(Principal Executive Officer)
|
Dated: April 2, 2018
|
By:
|
/s/ Robert Klein
|
|
Name:
|
Robert Klein
|
|
Title:
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
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