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.
Our ability to become a successful operating
mining company is contingent on whether we can continue to access adequate operating capital and can ultimately mine our properties and
monetize the uranium and vanadium processed at our mill on a profitable basis, and can then leverage those proceeds to finance further
mining activities and to acquire and finance additional reserves, all in spite of potentially significant fluctuations in the market
prices of uranium and vanadium.
We expect to generate operating losses for the next several years as
we incur expenses to scale up mining at our Sunday Mine Complex. During the year ended December 31, 2022, we generated a net loss of $713,767.
This loss was offset by the margin of approximately $3.2 million earned on the delivery of 125,000 pounds of natural uranium concentrate.
As of December 31, 2022, we had an accumulated deficit of $13,875,263 and working capital of $9,568,963.
The Company’s ability to continue its planned
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
Kinetic Separation technology, to scale up its mining operations at Sunday Mine Complex, to construct its own ore processing mill that
is expected to be licensed to utilize Kinetic Separation, and to initiate the processing of ore to generate operating cash flows.
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 or vanadium sales,
we may not be able to fully realize our planned operations.
Until we can produce and sell sufficient amounts of uranium and/or
vanadium, we will have no way to generate adequate cash inflows except by monetizing certain of our assets, partnering with third parties
that are better financed or obtaining additional financing of our own. We can provide no assurance that our properties will produce saleable
production or that we will be able to continue to find, develop, acquire and finance additional mineral resources. If we cannot monetize
certain existing assets, partner with another company that has cash resources, find other means of generating revenue other than uranium
or vanadium production and/or access additional sources of private or public capital, we may not be able to remain in business and our
shareholders may lose their entire investment.
7
Our ability to function as an operating mining company will be dependent
on our ability to mine our properties and permit, build and operate our mill 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 or vanadium at a profit sufficient to finance our operations, operate our mill profitably 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 and vanadium, 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 additional sources of capital sufficient to support our planned operations. As
such, substantial doubt exists as to whether our cash resources and working capital will be sufficient to fund our planned operations
over the next twelve months. Our long-term success will depend ultimately on our ability to raise additional capital, to achieve and maintain
operational profitability and to develop positive cash flows 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. In addition, in July 2023, we announced our plans
to permit and develop a mill for the processing of uranium and vanadium.
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 flows and net losses, with an accumulated deficit balance of $13.9 million and $13.2 million at December
31, 2022 and 2021, respectively. We have been reliant on royalty revenues and equity financings from the sale of our common shares in
order to fund our operations. We do not expect to achieve profitability or develop positive cash flows from operations in the near term.
As a result of our limited financial and operating history, including our significant negative cash flows and net losses to date, it may
be difficult to evaluate our future performance.
At December 31, 2022 and 2021, we had working capital of $9,568,963
and $4,492,169, respectively. The continuation of the Company as a going concern is dependent upon our ability to obtain adequate additional
financing. 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 consolidated financial statements for the years ended December 31, 2022 and 2021 were prepared
assuming that the Company would 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. The availability of such funds 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, 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.
8
Our operations are capital intensive, and
we will require significant additional financing to continue production at the Sunday Mine Complex, to permit and construct the ore processing
mill, to continue exploration and begin pre-extraction activities on our other existing uranium/vanadium projects, and to acquire additional
uranium/vanadium 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 continuing production
at the Sunday Mine Complex, to permit and construct the ore processing mill, continuing exploration on our other existing projects and
beginning pre-extraction activities on those projects, which include assaying, drilling, geological and geochemical analysis and mine
construction costs, and acquiring additional uranium/vanadium projects. In the absence of such additional financing, we would not be able
to fund our operations, which may result in delays, curtailment or abandonment of any one or all of our uranium projects.
Uranium/vanadium 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/vanadium projects may not result
in the establishment of ore bodies that contain commercially recoverable uranium/vanadium.
Uranium/vanadium 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, equipment and milling facilities; 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/vanadium 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/vanadium 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/vanadium 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/vanadium and develop
these uranium/vanadium projects into profitable mining activities, and there is no assurance that we will be successful in doing so for
any of our uranium/vanadium projects.
Whether an ore body contains commercially recoverable uranium/vanadium
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 on our uranium
properties. However, we have not established any measured, indicated or inferred mineral resources or any proven or probable reserves
through the completion of a feasibility study for any of our uranium properties and we have no current plans to seek to do so, as it would
not serve a business purpose at the present time. 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.
9
Because the number of mills permitted for
processing of uranium and vanadium is very limited, it may be difficult for us to gain access to a mill on favorable terms, or at all,
and this could negatively affect our ability to do business.
In the event that there is not a buying program
in place for uranium/vanadium ore, the Company would need to arrange with a third party for conventional milling services. Because the
number of mills permitted for processing of uranium and vanadium is very limited, it may be difficult for us to gain access to a mill
on favorable terms, or at all. This could result in increased costs and/or significant delays in, interruption of, or cessation of the
Company’s business activities. The practice of selling uranium/vanadium ore without first processing into yellowcake (U3O8) or Vanadium
Pentoxide (V2O5) would likely generate lower revenues.
Because the number of mills permitted for
processing of uranium and vanadium is very limited, we have determined that we will seek a permit and then construct our own uranium and
vanadium ore processing mill. The capital required and risks involved in such an endeavor could negatively affect our ability to do business.
The construction of a facility for the processing of uranium ore is
both a capital-intensive and regulatory intensive endeavor. Obtaining a license to construct and operate a processing plant to mill uranium
and vanadium is subject to a number of risks, including local, state and national regulations, and political and environmental influences.
Furthermore, we must raise sufficient capital to fund the permitting efforts and construction of the mill. We are subject to the risks
that adequate capital in general may not be available at the levels needed and risks that adequate capital may not be available for investments
in the front-end of the nuclear fuel cycle. If we are not able to address these risks and build a processing plant/mill then, we would
need to arrange with a third party for conventional milling services. It may be difficult for the Company to gain access to a third party’s
mill on favorable terms, or at all. This could result in increased costs and/or significant delays in, interruption of, or cessation of
the Company’s business activities.
Our ability to realize anticipated benefits of the Kinetic Separation
process is subject to uncertainties associated with that process.
In order to utilize Kinetic Separation to process uranium/vanadium
bearing ore, there are uncertainties that must be addressed. Currently, to utilize Kinetic Separation the Company plans to apply for its
own milling license for a processing facility. If this is not practical or feasible the Company would need to arrange to utilize a third
party’s mill. There are substantial costs and risks associated with both of these alternatives. The Company is open to continuing
to seek an alternative path forward that would allow the use of Kinetic Separation either inside a uranium mine or on the surface outside
of the underground workings to further reduce transportation costs. However, there is no assurance that such an alternative approach will
be approved for Western or other companies with comparable processes pursuing regulatory remedies.
In addition, although the Company has conducted initial tests of its
Kinetic Separation technology with what appear to be positive results, those results have not been validated by a qualified person.
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 may 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.
10
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, mining and planned uranium and vanadium ore processing
activities at the proposed company owned mill 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.
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.
11
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, wind, solar, 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.
12
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/vanadium properties, ore processing
mills, capital, customers and the employment and retention of qualified personnel. In the production and marketing of uranium and vanadium,
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 uranium production also competes with uranium recovered from the
de-enrichment of highly enriched uranium obtained from the dismantling 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 DoE. In addition, there are numerous
entities in the market that compete with us for properties and mills and are attempting to become licensed to operate ISR and/or underground
mining facilities. If we are unable to successfully compete for properties, mills, 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. 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 personnel,
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.
13
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.
Our business, financial condition and results of operations may
be negatively affected by economic and other consequences from Russia’s military action against Ukraine and the international sanctions
imposed in response to that action.
In late February 2022, Russia launched a large-scale military attack
on Ukraine. The invasion significantly amplified already existing geopolitical tensions among Russia, Ukraine, Europe, NATO
and the West, including the United States. In response to the military action by Russia, various countries, including the United States,
the United Kingdom and European Union issued broad-ranging economic sanctions against Russia and its companies, institutions, officials
and oligarchs. Additional sanctions have been and may be imposed in the future. Such sanctions (and any future sanctions) and other actions
against Russia may adversely impact, among other things, the Russian economy and various sectors of the economy, including but not limited
to, financial, energy, metals and mining, engineering and defense and defense-related materials sectors; result in a decline in the value
and liquidity of Russian securities; result in boycotts, tariffs, and purchasing and financing restrictions on Russia’s government,
companies and certain individuals; weaken the value of the ruble; downgrade the country’s credit rating; freeze Russian securities
and/or funds invested in prohibited assets and impair the ability to trade in Russian securities and/or other assets; and have other adverse
consequences on the Russian government, economy, companies and region. Further, several large corporations and U.S. states have announced
plans to divest interests or otherwise curtail business dealings with certain Russian businesses.
The ramifications of the hostilities and sanctions may not be limited
to Russia, Ukraine and Russian and Ukrainian companies and may spill over to and negatively impact other regional and global
economic markets (including Europe and the United States), companies in other countries (particularly those that have significant trade
with Russia and Ukraine) and on various sectors, industries and markets for securities and commodities globally, such as oil and
natural gas. Accordingly, the actions discussed above and the potential for a wider conflict could increase financial market volatility
and cause severe negative effects on regional and global economic markets, industries, and companies. In addition, Russia may take retaliatory
actions and other countermeasures, including cyberattacks and espionage against other countries and companies around the world, which
may negatively impact such countries and companies.
The extent and duration of the military action or future escalation
of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any
diplomatic negotiations cannot be predicted.
While we expect any direct impacts to our business to be limited, the
indirect impacts on the economy, such as recession, and on the mining industry and other industries in general could negatively affect
our business and may make it more difficult for us to raise equity or debt financing and/or impair global equity prices, including Western’s.
In addition, the impact of other current macro-economic factors on
our business, which may be exacerbated by the war in Ukraine – including inflation, supply chain constraints and geopolitical events
– is uncertain.
The COVID-19 coronavirus could adversely impact our business,
including our mine development plans.
In December 2019, a novel strain of coronavirus, COVID-19, was reported
to have surfaced in Wuhan, China. Since then, the COVID-19 coronavirus has spread to multiple countries, including the United States. As
the COVID-19 coronavirus continues to spread in the United States, we may experience disruptions that could severely impact our business,
including:
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The global outbreak of the COVID-19 coronavirus continues to evolve.
The extent to which the COVID-19 coronavirus and its subvariants may impact our business will depend on future developments, which are
highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak,
travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the
effectiveness of actions taken in the United States and other countries to contain and treat the disease.
Risks Related to Our Stock
If we are unable to raise additional capital, our business may
fail and shareholders may lose their entire investment.
We had $9,682,133 in cash at December 31, 2022. 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
shareholders. 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 shareholders
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 shareholders and could adversely affect the market price of our common shares.
The Company’s common shares may at times be traded in low
volumes, which may negatively affect your ability to sell shares.
The Company’s common shares may trade at times 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. 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 advanced and viable. As a consequence, there may be periods of several days or
more when trading activity in the Company’s shares is minimal, 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, certain 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 result in the loss by investors of all or part of their investment.
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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:
● price and volume fluctuations in the overall stock market from time to time;
● the emergence of new competitors;
● commencement of, or our involvement in, litigation;
● dilutive issuances of our common shares or the incurrence of additional debt;
● adoption of new or different accounting standards;
● loss of a major funding source; or
● departures of key personnel.
Due to the continued potential volatility of its 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 shareholders 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 dividends or distributions on our common shares. Any future dividends on common
shares will be declared, if at all, 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 is our largest shareholder, and as
a result he may be able to exert control over us and may have actual or potential interests that may diverge from yours.
George Glasier, our CEO, beneficially owns, in the aggregate, about
12.5% of our common shares. As a result, Mr. Glasier might be able to influence many matters requiring shareholder 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 shareholders 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 may have interests that diverge from those
of other holders of our common shares. As a result, Mr. Glasier may vote the shares he owns or controls or otherwise cause us to take
actions that may conflict with your best interests as a shareholder, which could adversely affect our results of operations and the trading
price of our common shares. Through this control, Mr. Glasier can exert influence over our management, affairs and all matters requiring
shareholder 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.
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Risks Related to Our Regulatory Environment
The SEC’s adoption of the “Modernization of Property
Disclosures for Mining Registrants,” as codified in S-K 1300, has created new disclosure requirements for mineral reserves and mineral
resources that create some ambiguity for issuers required to comply with both the requirements of S-K 1300 and NI 43-101 and may result
in increased compliance costs.
SEC Industry Guide 7 has been rescinded and replaced by S-K 1300, which
requires that we disclose specific information related to our material mining operations, including with particularity any mineral resources
and mineral reserves. Although we have established the existence of mineralized materials on our uranium properties, we have not established
any measured mineral resources or any proven or probable reserves through the completion of a feasibility study for any of our uranium
properties and we have no current plans to seek to do so, as it would not serve a business purpose at the present time. Nevertheless,
if in the future we were to seek to identify any measured mineral resources or to establish any proven or probable reserves, we would
be required to provide disclosure in that regard under both S-K 1300 and NI 43-101. While S-K 1300 is substantively similar to NI 43-101
(with the primary difference being between the format required for an S-K 1300 technical report summary and the format required for an
NI 43-101 technical report), S-K 1300 is potentially subject to unknown interpretations, which could require the Company to incur substantial
costs associated with compliance. We cannot predict the nature of any future enforcement, interpretation, or application of S-K 1300.
Any further revisions to, or interpretations of, S-K 1300 or NI 43-101 could result our company incurring unforeseen costs associated
with compliance with both of those disclosure regimes.
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 which houses the Kinetic Separation units and a shop office. In 2022, the rental of a new mining operations office was added at 31525
Hwy 90 Road, Nucla, Colorado, USA.
The diagram below illustrates the location of the Company’s properties:
1. Sunday Mine Complex
2. San Rafael
3. Sage
4. Dunn
6. Hansen/Taylor Ranch
7. Bullen Property (Weld County)
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Overview
Western Uranium & Vanadium Corp is engaged in the business of exploring,
developing, mining and production from its uranium and vanadium resource 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 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, 2022, 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
● 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, 2022, include:
● The Keota Uranium project acreage located in Weld County, Colorado
● Ferris Haggerty located in Carbon County, Wyoming
The Company has a 100% interest in all of these properties except for
the Hansen/Taylor Ranch, of which the company owns 49%.
Although we have established the existence of mineralized materials
on our uranium properties, we have not established any measured, indicated or inferred mineral resources or any proven or probable reserves
through the completion of a feasibility study for any of our uranium properties and we have no current plans to seek to do so, as it would
not serve a business purpose at the present time.
The near term plan for the Company’s resources is to initially
mine 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 previous mining interval
was from 2006 to 2009. Based on the available records, only in 2009 did any surface 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.
Mining Properties
Set forth below are details regarding our mining properties operated
by us, which have been prepared in accordance with the requirements of S-K 1300.
1. Sunday Mines Complex
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 flank 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 mine workings 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
previously actively mined from 2007 to 2009, by a prior owner. In 2017, the mines were re-opening for a project involving exploration,
development, and mining.
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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 fees are approximately $34,255 due September 1st each
year. 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. During 2019, a mine re-opening project was implemented
at the Sunday Mine Complex to identify high-grade vanadium ore, followed by bulk sampling and development drilling. Active mining was
conducted and the extracted ore was stock piled underground in the mine. 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 by the Company 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 mine 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.
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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 the Company to prepare a technical report compliant with NI 43-101 on the Sunday Mine Complex Uranium (SMC) Project (the “Sunday
Mine Report”). The Sunday Mine Report was finalized on July 7, 2015 and filed on sedar.com on July 16, 2015.