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, 2024
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 & VANADIUM CORP.
(Exact Name of Registrant as Specified in Its Charter)
5 Church Street Toronto, Ontario, Canada M5E 1M2
(Address of Principal Executive Offices) (Zip Code)
(Registrant’s
Telephone Number, Including Area Code)
Securities registered pursuant to Section
12(b) of the Act:
Title of each class Trading Symbol(s) Name of exchange on which registered
N/A
Securities registered pursuant to Section
12(g) of the Act:
Common Shares
(Title of Class)
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 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth 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.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If an emerging growth company, indicate by check mark 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 has filed a report on
and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act,
indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during
the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of June 30, 2024, the last business day of
the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common shares
held by non-affiliates of the registrant was approximately $63.9 million, based on the closing price of the registrant’s common
shares of $1.27 per share.
As of April 14, 2025, 59,386,546 of the registrant’s no par value
common shares were outstanding.
WESTERN URANIUM & VANADIUM CORP.
FORM 10-K
TABLE OF CONTENTS
USE OF NAMES ii
CURRENCY ii
FORWARD-LOOKING STATEMENTS AND INTRODUCTION ii
GLOSSARY v
GLOSSARY OF REGULATORY AGENCIES AND EXCHANGES vii
PART I 1
ITEM 1. BUSINESS 1
ITEM 1A. RISK FACTORS 13
ITEM 1B. UNRESOLVED STAFF COMMENTS 24
ITEM 1C. CYBERSECURITY 24
ITEM 2. PROPERTIES 25
ITEM 3. LEGAL PROCEEDINGS 44
ITEM 4. MINE SAFETY DISCLOSURES 44
ITEM 6. [RESERVED] 45
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 56
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 56
ITEM 9A. CONTROLS AND PROCEDURES 56
ITEM 9B. OTHER INFORMATION. 57
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. 57
PART III 58
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 58
ITEM 11. EXECUTIVE COMPENSATION 61
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 67
ITEM 15. EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES 68
SIGNATURES 70
i
USE OF NAMES
As used in this Form 10-K annual report, unless
the context otherwise requires, the terms “we,” “us,” “our,” “Western” and “WUC”,
or the “Company” refer to Western Uranium & Vanadium Corp., an Ontario Canadian corporation, and its subsidiaries.
CURRENCY
The accounts of the Company are reported in U.S.
dollars. Unless otherwise specified, all dollar amounts referenced in this Form 10-K annual report 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.
CAUTIONARY NOTE TO INVESTORS CONCERNING DISCLOSURE OF MINERAL RESOURCES
& RESERVES
On September 16, 2015, Western completed its acquisition of Black Range
Minerals Limited (“Black Range”). Under United States Securities and Exchange Commission (“Commission”) rules,
this transaction triggered the Company being deemed a United States domestic issuer and losing its foreign private issuer exemption. On
April 29, 2016, the Company filed a Form 10 registration statement with the Commission after converting its basis of accounting from International
Financial Reporting Standards (“IFRS”) to generally accepted accounting principles in the United States (“U.S. GAAP”).
On June 28, 2016, the Company’s registration statement became effective and Western became a United States reporting issuer.
On June 30, 2023, Western re-qualified as a foreign private issuer
as that term is defined in Rule 3b-4(c) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”). As a result,
the Company may now utilize certain accommodations made to foreign private issuers, including (1) an exemption from complying with the
Commission’s proxy rules, (2) an exemption from the Company’s insiders having to comply with the reporting and short-swing
trading liability provisions of Section 16 under the Exchange Act, (3) the ability to make periodic filings with the Commission on the
Form 20-F and Form 6-K foreign issuer forms, and (4) the ability to offer and sell unrestricted securities outside of the United States
pursuant to Rule 903 of Regulation S. The Company plans to take advantage of these accommodations. However, the Company currently has
decided to voluntarily continue to file periodic reports with the Commission using domestic issuer forms including filing annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. On the subsequent measurement date, June 30, 2024, Western
reconfirmed its qualification as a foreign private issuer.
On October 31, 2018,
the SEC adopted the Modernization of Property Disclosures for Mining Registrants (the “New Rule”), introducing significant
changes to the existing mining disclosure framework to better align it with international industry and regulatory practice, including
Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”), a rule developed
by the Canadian Securities Administrators (the “CSA”) that establishes standards for all public disclosure an issuer makes
of scientific and technical information concerning mineral projects. The New Rule was codified as 17 CFR Subpart 220.1300 and 229.601(b)(96)
(collectively, “S-K 1300”) and replaced SEC Industry Guide 7. Pursuant to the New Rule, issuers are required to comply with
S-K 1300 as of their annual reports for the first fiscal year beginning on or after January 1, 2021.
ii
Unless otherwise indicated,
the following terms, when used in this Form 10-K annual report, have the meanings given them in S-K 1300. The applicable S-K 1300 definitions
are copied below.
S-K 1300 Terms and
Definitions:
iii
● Qualified person is an individual who is:
(i) be either:
(iv) require or encourage continuing professional development;
(vi) provide a public list of members in good standing.
iv
GLOSSARY
The following defined technical terms are
used in this Annual Report:
● Assay: The testing of a metal or ore to determine its ingredients and quality.
● Copper: A red-brown metal, the chemical element of atomic number 29.
● Grade: Quantity or percentage of metal per unit weight of host rock.
● Host rock: The rock containing a mineral or an ore body.
v
● Stope: An excavation in a mine from which ore is, or has been excavated.
vi
GLOSSARY OF REGULATORY AGENCIES AND EXCHANGES
● APCD: Colorado Air Pollution Control Division
● DRMS: Colorado Division of Reclamation, Mining and Safety
● DEQ: Department of Environmental Quality.
● DWQ: The Utah Division of Water Quality.
● MLRB: Mined Land Reclamation Board of the state of Colorado.
● WQCD: Colorado Water Quality Control Division
vii
PART I
ITEM 1. BUSINESS
CORPORATE HISTORY
Western Uranium & Vanadium Corp. (“Western”
or the “Company”, formerly Western Uranium Corporation) 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 subsequently reconstituted its board of directors and senior management team. Western is a Canadian
domestic issuer and Canadian reporting issuer.
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 an extensive underground haulage development with
several vent shafts complete with exhaust fans. The Sunday Mine Complex is the Company’s core resource property and in July
2021 was assigned “Active” status when mining operations were restarted.
On September 16, 2015, Western completed its acquisition
of Black Range Minerals Limited (“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 options to purchase Western common shares to certain employees, directors, and consultants. 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 large uranium resource located
in Colorado (the “Hansen-Taylor Complex”) and a 100% interest in a 25 year license for Kinetic Separation (“Kinetic
Separation”, formerly known as “Ablation”) and related patents from Ablation Technologies, LLC. The Hansen-Taylor Complex
is principally a sandstone-hosted deposit that was discovered in 1977.
Furthermore, related to Kinetic Separation in
connection with the acquisition of 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 of the Company (“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 $309,138 (AUD $500,000) to Seller within 60
days of the first commercial application of the Kinetic Separation. Western assumed this contingent payment obligation in connection with
the Black Range Transaction.
Under United States Securities and Exchange Commission
(“Commission”) rules, the Black Range transaction triggered the Company being deemed a United States domestic issuer and losing
its foreign private issuer exemption. On April 29, 2016, the Company filed a Form 10 registration statement with the Commission after
shifting its basis of accounting from IFRS to U.S. GAAP. On June 28, 2016, the Company’s registration statement became effective
and Western became a United States reporting issuer.
On June 30, 2023, Western re-qualified as a foreign private issuer
as that term is defined in Rule 3b-4(c) promulgated under the Exchange Act. As a result, the Company may now utilize certain accommodations
made to foreign private issuers, including (1) an exemption from complying with the Commission’s proxy rules, (2) an exemption from
the Company’s insiders having to comply with the reporting and short-swing trading liability provisions of Section 16 under the
Exchange Act, (3) the ability to make periodic filings with the Commission on the Form 20-F and Form 6-K foreign issuer forms, and (4)
the ability to offer and sell unrestricted securities outside of the United States pursuant to Rule 903 of Regulation S. The Company plans
to take advantage of these accommodations. However, the Company currently has decided to voluntarily continue to file periodic reports
with the Commission using domestic issuer forms including filing annual reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K. On the subsequent measurement date, June 30, 2024, Western reconfirmed its qualification as a foreign private issuer.
1
The Kinetic Separation process is dramatically
different from conventional mining techniques. Subject to regulatory approvals for its use, Kinetic Separation is beneficial in the following
ways:
Kinetic Separation can be used on legacy uranium
stockpiles in the western United States, removing 85-90% of the uranium. This is an application through which Kinetic Separation 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. At the present time, kinetically
separating these legacy stockpiles is not currently planned by the Company.
In the estimation of management, Kinetic Separation
mining allows the cost of production of uranium to be reduced by 44-53%.
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. The mailing address of our headquarters is 5 Church Street, Toronto, Ontario, M5E 1M2, Canada, and the telephone
number 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 $1,235,000,000 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
Corporation (Utah) (“Western 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., Black Range Development Utah LLC, Maverick Strategic Minerals Corp, Pinon Ridge
Corporation (“PRC”) and Mustang Mineral Processing Inc (“Mustang”).
OUR COMPANY
Western is in the business of exploring,
developing, mining and production of its uranium and vanadium resource properties in the states of Utah and Colorado in the United
States of America (“United States”).
Western is an exploration stage issuer for purposes
of S-K 1300. Under S-K 1300, a mining company like ours can be classified as either an exploration stage issuer, a development stage issuer
or a production stage issuer. Exploration stage issuers are companies that are engaged in the search for mineral deposits, which are not
in either the development stage or the production stage. In order to be classified as a development stage issuer or a production stage
issuer, the Company must have already established mineral reserves. The Company has not established mineral reserves for purposes of S-K
1300.
Our mineral properties are located in western Colorado and eastern
Utah and adjacent areas of the western United States. We have committed to permitting and building our own mill to process uranium and
vanadium and incorporating Kinetic Separation into our licensing. Our primary focus consists of the mining operations at the fully permitted
Sunday Mine, the commercialization of Kinetic Separation, completing the permitting and construction of mineral processing facilities
(uranium and vanadium), and permitting the San Rafael Project.
2
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 mine workings, office/storage/shop and change buildings, and extensive underground haulage development with multiple vent
shafts complete with exhaust fans.
We have acquired a license for Kinetic Separation,
which provides a low cost, purely physical, method of separating uranium and vanadium mineralization from waste. 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 Kinetic Separation is expected
to have a very positive effect on the development of not only our Sunday Mine Complex, but also most of our and other deposits, because
it significantly reduces both capital and operating costs. Extensive test work has shown that from amenable sandstone-hosted ore types,
typically more than 90% of the mineralization can be separated into 10-20% of the initial sample mass.
OUR STRATEGY
Our vision is to become a regional uranium and vanadium developer,
producer, and processor. Our strategy is to build value for shareholders by advancing our projects for further scaled-up mining production.
We have committed to permitting and building our own processing plant to mill uranium and vanadium and incorporating Kinetic Separation
into our licensing. Facility design and permitting have begun on parcels of land acquired in Utah and Colorado, on which we intend to
develop and build our processing facilities. In 2022, Western began acquiring mining equipment and vehicles and building a mining team
to put in place an in-house mining capability and to replace its previous outsourced mining contractor. During 2024 and 2023, this team
was conducting mining operations at the Sunday Mine Complex developing the mine for future production and extracting ore to be stockpiled
underground, to assure the availability of feedstock to baseload the mineral processing facilities.
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 November 20, 2024, the Company closed a
private placement of 4,142,906 units at a price of $0.94 (CAD $1.32) per unit. The aggregate gross proceeds raised in the private
placement amounted to $3,897,166 (CAD $5,468,636) and proceeds net of issuance costs were $3,546,870 (CAD $4,975,966). Each unit is
comprised of one common share of Western and one common share purchase warrant. Each warrant is exercisable into one common share at
a price of $1.27 (CAD $1.78) per share for a period of four years following the closing date of the private placement.
On December 12, 2023, the Company closed a non-brokered
private placement of 5,215,828 units at a price of $1.02 (CAD $1.39) per unit. The aggregate gross proceeds raised in the private placement
amounted to $5,324,989 (CAD $7,250,000 as of December 31, 2023). Issuance costs, consisting principally of commissions and legal fees,
were $488,122 (CAD $661,912 as of December 31, 2023). Each unit consisted of one common share plus one half of one warrant. Each warrant
is exercisable into one share at a price of $1.38 (CAD $1.88) per common share for a period of four years following the closing date of
the private placement. A total of 5,215,828 common shares and warrants to purchase 2,607,913 common shares were issued to investors in
connection with the private placement.
During the years ended December 31, 2024 and 2023,
an aggregate of 5,198,540 and 1,165,450 warrants were exercised for total proceeds of $4,605,458 (CAD $6,238,248) and $1,004,044 (CAD
$1,358,565), respectively.
On November 28, 2024, The Company’s Board approved amendments
to extend the term and reduce the exercise price of 2,868,541 previously issued common share purchase warrants. These warrants, originally
issued during December 2021 and January 2022, had initial exercise prices of $1.94 (CAD $2.50) and $2.00 (CAD $2.50) per share, respectively,
and were set to expire three years post-issuance. Effective November 28, 2024, the term was extended to January 20, 2026, a date that
is less than five years since the original date of issuance. Effective February 27, 2025 the exercise price was reduced to $1.39 (CAD
$2.00), the date upon which the Canadian Securities Exchange (CSE) accepted the warrant repricing and the amended Form 13 filing was approved
for filing. During the year ended December 31, 2024, the Company recorded an incremental fair value of $184,308 arising from the extension
of the term. On February 27, 2025, the Company recorded an incremental fair value of $104,840 for the modification of the exercise price.
The cost of the warrant modifications was accounted for as a cost of raising capital. This modification was granted to facilitate the
raising of additional equity capital by extending the exercise period and lowering the exercise price, thereby providing warrant investors
with more time and incentive to exercise their warrants.
3
Uranium/Vanadium Production
Western historically positioned itself for operational
flexibility with the goal of beginning production as expeditiously as possible once market conditions for uranium and/or vanadium were
favorable. Well maintained existing infrastructure from years of previous production allowed the Company to quickly advance the mine to
a production ready status.
The 2018 vanadium price rally catalyzed a project
at the Sunday Mine Complex. Western reinitiated active mining operations during 2020 at the Sunday Mine Complex project beginning with
infrastructure and exploratory work projects, which culminated in the commencement of production with the mining and stockpiling of the
extracted uranium/vanadium ore. The mining team refocused on surface infrastructure projects required by the DRMS before COVID-19 stoppages
caused the mines to be put back into Temporary Cessation.
During 2020, COVID-19 induced mine closures began
a rally in uranium prices. In 2021, catalysts continued to provide positive signals for uranium miners and investors. This catalyzed work
during 2021 and 2022 at the Sunday Mine Complex project which commenced in July 2021. After completion of infrastructure work in this
new area of the mine, exploration and development of the GMG ore body was the first project phase. Drifting, continuous high-grade ore
was intersected, which led to the mining and underground stockpiling of over 3,000 tons of uranium/vanadium ore during the December 2021
to March 2022 period.
Thereafter, Western began the acquisition of a full complement of mining
equipment and personnel to take over mining operations. Western’s transition from employing a mining contractor to building an in-house
mining operation has now been substantially completed. Since this transition began in spring 2022, additional employees have been hired
to support mining operations and mining equipment and vehicles have been acquired to support deployment of two (2) fully equipped mining
teams. The equipment has been prepared for operations and readied for deployment; site infrastructure upgrades have been finished. In
early 2023, the mines were reopened for ventilation and infrastructure upgrades. Mining operations restarted in April 2023 and have been
continually focused on additional development in multiple areas of the mine.
It may be difficult for many uranium mining companies
to expand production in a timely manner in response to rising uranium prices, as it requires many years of permitting and development
to bring new mines into production. These lead times will put further upward pressure on prices. Thus, Western has a competitive advantage,
due to the aforementioned projects, because our mining properties can scale-up production on short notice.
The Company holds an exclusive 25-year license
to use Kinetic Separation, a proven technology that we anticipate will improve the efficiency of hauling and processing ore from Western’s
sandstone-hosted mines. The Company has proven that post-Kinetic Separation ore has 90% of the uranium mineralization of the pre-Kinetic
Separation ore in 10% of its mass. We are planning to build a Kinetic Separation machine, with a capacity of forty tons per hour at an
aggregate cost of $1.0 million dollars. 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 the right to sub-license
the technology to third parties. The Company may not sell or assign the Kinetic Separation license; however, it could be transferred in
the sale of Western or the subsidiary holding the license.
Prior to the planned processing plant becoming
licensed and operational, our in-house mining teams will be stockpiling uranium/vanadium mined material. When the processing plant is
constructed, Western will become fully operational and begin processing the accumulated stockpiles. Western believes that its mineral
resources have a reasonable prospect for economic extraction. However, the Company has not completed a preliminary economic assessment
under NI 43-101 or a feasibility study or preliminary feasibility study under S-K 1300 that would be needed to establish the existence
of proven or probable reserves and has instead allocated that capital to the aforementioned mining operations at the Sunday Mine Complex.
Uranium/Vanadium Processing Facilities Development
Mustang Minerals Processing
Plant
Our current plans call for the permitting and construction of a mineral
processing plant at our newly acquired site in Colorado. Western expects to benefit from the prior site owner’s completion of all
phases of licensing and permitting of the Pinon Ridge Mill project. The Company’s plans are to develop its initial mill at the Colorado
location, which is much closer to the Sunday Mine Complex than the Maverick site. This mill is expected to have a cost of approximately
$75 million and is targeted to start up in 2029. This facility will be designed to recover uranium and vanadium both from conventional
materials mined from Company mines and materials produced by other mining companies. The processing plant will utilize the latest processing
technology, including Western’s patented Kinetic Separation process. These technology advancements will result in lower overall
capital and processing costs. After permitting and construction, and subject to the availability of financing, the processing of uranium
and vanadium materials is expected to commence in early 2029.
4
Maverick Minerals Processing Plant
The development of the Maverick Minerals Processing
Plant in Green River, Utah, has advanced since this project commenced. In the second quarter 2023, the land acquisition was completed
and in the third quarter 2023 the project design and permitting activities began with the engagement of a full team of consulting firms,
chosen for their expertise in engineering / mill design, permit preparation, environmental, hydrology, and air quality. Site evaluation
work was undertaken and a preliminary plant and property site plan was compiled for the location of monitor wells, meteorological towers,
buildings, processing circuits, tailings and evaporation ponds, roads/infrastructure and ore storage facilities. At a pre-application
permitting meeting in November 2023, the Company and its consultants met onsite with local officials. During 2024, additional baseline
data required for submission of the permitting application was collected from the onsite meteorological towers. A final plant and animal
study was completed. This study confirmed the site is clear of endangered plant life that is only observable during the spring growing
season. Additional consulting commitments were made to advance the licensing and development with Precision Systems Engineering (PSE),
a leading engineering and design consulting firm headquartered in Sandy, Utah. PSE was working to release the preliminary engineering
design and cost estimate for a 500 ton per day mill. Next steps for site work included the planned installation of monitor wells. Additional
work has been deferred while Western reassesses its design and strategy now that it has purchased a previously licensed mill site in Colorado
(please see Colorado Mill Site Purchase, below). This location remains valuable to Western due to its close proximity, approximately 4
miles, to the San Rafael project which is slated as Western’s second production center.
Mustang Mineral Processing Site Acquisition
On October 1, 2024, Western, through its wholly
owned subsidiary, Western Utah, executed a binding stock purchase agreement (the “PRC Agreement”) to purchase 100% of the
shares of PRC from a private investor group and thereby acquire Mustang, which is a wholly owned subsidiary of PRC. Mustang owns an 880-acre
property located in Montrose County, Colorado, where a uranium processing mill was previously licensed but never constructed. The acquisition
becomes the second property that Western has acquired, in addition to the Maverick site in Utah. It also becomes part of Western’s
plans for developing and licensing one or more uranium and vanadium processing facilities to process production from its resource properties
in Colorado and Utah.
Pursuant to the PRC Agreement, the former PRC shareholders were paid
$829,167 for their equity and shareholder loans. After closing, a creditor holding a security interest against Mustang was paid a total
of $1,148,125 to retire an outstanding promissory note. Western also assumed certain PRC liabilities in the transaction and royalty obligations
to an unrelated third party with future commitments to be satisfied. These royalties are based on the volume of minerals processed through
any mineral processing plant located on the property.
The transaction was accounted for as a purchase
of an asset.
URANIUM MARKET OUTLOOK
World demand for clean, reliable, and affordable
electricity is growing. The future demand for uranium is expected to increase due to the construction of additional nuclear reactors around
the world. Multiple Japanese utilities have nuclear reactors in the process of restarting. Chinese utilities continue to aggressively
build new reactors and buy uranium, with the goal of becoming the world leader in nuclear electricity generation. In total, according
to the World Nuclear Association (WNA), there are many new reactors under construction in the world. Existing and new nuclear technologies
are receiving unprecedented support on a global basis, as a base load electricity source with zero carbon emissions.
After the 2011 Fukushima nuclear accident, uranium markets endured
a decade long bear market due to excess supply created by nuclear reactor shutdowns and large quantities of new material entering the
market. In recent years, this excess supply has been depleted by utility use, production curtailments, COVID-19 induced production suspensions,
and financial buyers purchasing physical uranium (“U3O8”). A uranium global supply/demand imbalance had been projected by
analysts to impact uranium prices in coming years. In 2020 COVID-19 induced mine closures and in 2021 Sprott Physical Uranium Trust (“SPUT”)
purchased 23 million lbs of U3O8, underscoring the imbalance. Both of these catalysts have depleted excess inventories
and accelerated the timing of the supply/demand impact. Demand is increasing with new reactors being built, next generation reactors being
advanced, operating reactor life being extended, idle reactors being restarted, and nuclear phase-out plans being reversed. At a macro-level,
the electrification transition and climate change initiatives have increased global support for nuclear.
5
In 2022, geopolitical events became the main driver
of uranium markets. During January, mass government protests in Kazakhstan were suppressed by the Collective Security Treaty Organization,
a military alliance of regional allies led by Russia. Uranium markets reacted as Kazakhstan was responsible for 45% of the 2021 global
uranium production. In February, the Russian invasion of Ukraine added more volatility due to Russia’s dominant position in nuclear
fuel services including 38% of world conversion capacity and 46% of world enrichment capacity. These events led to new SPUT capital inflows
and the purchase of 12 million lbs of U3O8 during the first quarter of 2022.
With equity markets having their worst year since 2008, 2022 became
a transformational year for the normally staid nuclear power and physical uranium markets as the status quo was disrupted. There was a
rush on contracts for the limited available conversion and enrichment capacity which caused a price surge. Due to shrinking secondary
supplies, utilities followed by signing new uranium supply contracts that increased long-term U3O8 prices from $43 to $52 during the year.
The real uranium industry bull market was in the
underlying fundamentals attributable to multiple factors, including: climate change, energy security, supply chain and energy scarcity
initiatives. This inflection point will likely impact markets for decades as the supply/demand imbalance has flipped from a market with
excess supply into a market with excess future demand. With the reduced availability of secondary supplies, utilities have added multi-year
contracts with mining companies for primary supply. The drivers expanding the demand for nuclear fuel include: non-nuclear nations adding
nuclear power generation, nuclear nations expanding fleets and/or extending lives of existing reactors, idled nuclear reactors being re-started,
reactors being phased out and shutdowns being reversed, and the deployment of advanced reactors / SMRs. However, the challenge is in meeting
increasing demand while being constrained from sourcing new material from the world’s largest suppliers.
Russia’s invasion of Ukraine and the ensuing
global energy crisis has focused attention on security of supply and supply chain risks and has caused most of the world to re-evaluate
their dependence upon nuclear fuel exported by Russia. The dominant market position of Rosatom, Russia’s national nuclear company,
was developed through decades of government subsidies. Because of the Ukraine invasion, new contracts are largely not being signed with
Rosatom, and deliveries under existing contracts continue to be made. Future deliveries potentially could be at risk due to sanctions
/ legislation or a Russian embargo. Customer dependencies upon the Russian supply of uranium, conversion and enrichment are being addressed
slowly by governments as alternative suppliers are not currently available. A secondary concern is Kazakhstan, the world’s largest
uranium producing country and the second longest continuous land border in the world shared with Russia. The concern is Russia exerting
influence over Kazakhstan amid their currently strained relationship. Additionally, Kazatomprom has put in place infrastructure to supply
uranium to China under its 15 year plan to deploy 150 new nuclear reactors. In 2022, it has become evident that this small area of the
world has emerged to form the key drivers in the future of the global nuclear fuel cycle.
In July 2023, the government of Niger was overthrown
by its military. This is significant because the new regime is opposed to Western interests and this landlocked West African country holds
the 7th largest uranium resource in the world and was producing about 5% of global production. Multiple uranium mine development projects
in the county continue to proceed despite the evacuation of many foreign nationals. The situation in Niger is a developing matter and
the conflict has an anti-French sentiment. The Junta has initiated multiple actions that are counter to French interests. Most importantly,
Niger’s Junta has threatened the export of uranium to France which has serious implications because France had acquired 20% of its
natural uranium from Niger.
In December 2023, in a show of bipartisan support,
the U.S. House of Representatives passed the Prohibiting Russian Uranium Imports Act. The reliance on Russian uranium, conversion and
enrichment services is being viewed quite differently than it has for decades. The legislative process toward enacting a Russian uranium
ban culminated in one being enacted in May 2024. However, the ban will not take full effect until 2028, and it appears that multiple waivers
have been granted on preexisting contracts.
Spot uranium prices reacted to longer-term supply/demand
constraints and geopolitical risks hitting their peak at over $100/lb in January 2024. During 2024, there were periods of notable support
as giant tech companies made plans to utilize nuclear energy and artificial intelligence (AI) and data centers were projected to consume
increasing amounts of energy in the future. While term prices increased to the $80/lb range, spot uranium prices have endured a slow decline
from the high to the $64/lb level at the end of March 2025.
Events of the last few years have set in motion uranium market and
nuclear fuel opportunities for the next decade and beyond. There are positive catalysts across multiple levels of the nuclear fuel and
uranium markets. This is occurring at a time when aggregate uranium inventory has declined to its lowest levels in over a decade. We believe
that restocking of utility inventories, new demand and shifting demand will catalyze a uranium bull market that will increase uranium
prices toward levels that will drive uranium mining company production, profits and equity prices. As a result, Western made the largest
investments in the Company’s history during 2024 in advancing its operational strategy and mining operations.
6
Nuclear Fuel and Uranium Effect from the
Russian Invasion of Ukraine
The start of the Russia/Ukraine war created extraordinary
volatility in uranium markets during the first half of 2022. At the peak, the spot price was at an 11 year high. Prior to the invasion
on February 24, 2022, uranium spot prices were in the $43 per pound range and rose to slightly over $63 per pound by April 2022; an increase
of approximately $20 per pound. Later in May 2022 and June 2022, the spot price receded to $45 levels, before recovering to the $50 +/-
per pound price level. This price level was maintained for an extended period as the immediate ban/sanctions anticipated by investors
of nuclear fuel and services from Russia couldn’t be implemented.
Equity markets followed the price action of physical
uranium prices in speculation that governments worldwide would sanction and ban nuclear fuel from Russia. This was in recognition of Russia’s
dominant position in nuclear fuel services including 38% of world conversion capacity and 46% of world enrichment capacity. The market
position of Rosatom, Russia’s national nuclear company, was developed through decades of government subsidies. However, because
of the lack of replacement capacity in the global nuclear fuel cycle, Rosatom has avoided sanctions.
Because of the Ukraine invasion, new contracts
are largely not being signed with Rosatom, but deliveries under existing contracts continue to be made. Customer dependencies upon the
Russian supply of uranium, conversion and enrichment are being addressed slowly by governments as alternative suppliers were not currently
available. However, a desire to stay away from bad actors and the threat of Russia weaponizing energy exports or a Russian embargo has
elicited responses. Worldwide, utilities have accelerated their contracting of non-Russian conversion and enrichment services. New uranium
supply agreements are being signed with western producers. There has been significant legislative progress favorable to increasing domestic
uranium and nuclear fuel production in the United States. In advance of the United States putting in place a ban or sanctions on Russian
uranium, the DOE continues to make preparations for a Russian counter-sanction terminating the flow of nuclear fuel and services from
Russia.
In January 2023, ban and sanction discussions
intensified as Rosatom was shown to have become an active participant in the Ukraine war. An article entitled “Russia’s nuclear
entity aids war effort, leading to calls for sanctions” was published by the Washington Post. Obtained documents show that the Rosatom
state nuclear power conglomerate was supplying the Russian military with “components, technology, and raw materials for missile
fuel” to be used in the Ukraine war.
United
States Ban of Russian Uranium
In response to Russia’s war in Ukraine, the United States legislature passed
the Prohibiting Russian Uranium Imports Act (H.R. 1042) to ban Russian uranium imports into the U.S. Unanimous passage of The Prohibiting
Russian Uranium Imports Act (H.R. 1042) in April 2024 by the U.S. Senate followed the U.S. House of Representatives’ passage of
the bill in December 2023. Subsequently, on May 13, 2024, President Biden signed this legislation into law. The ban became effective
90 days after its enactment on August 11, 2024 and was phased in under Department of Energy conditional waivers before becoming a complete
ban on January 1, 2028. Importantly, the enactment of a Russian ban releases funding to support the American nuclear supply chain. This
funding was deployed by the DOE under a new program called the Low-Enriched Uranium (LEU) – Enrichment Acquisition. The United
States has the world’s largest civilian nuclear reactor fleet, and it has now taken steps to reduce its reliance on state-sponsored
Russian nuclear fuel.
7
Russian
Response to Uranium Ban
On May 14, 2024, the day following the ban enactment, Bloomberg reported that Russia had responded
with TENEX issuing force majeure notices to U.S. utility customers. TENEX is the subsidiary of Rosatom, the state nuclear energy corporation,
and the entity through which U.S. counterparties contract for Russian uranium product imports into the United States.
The TENEX force majeure notices required U.S. customers to secure waivers
within 60 days that exempt them from the new U.S. Russian uranium ban or risk being moved to the back of the line for uranium deliveries
if they are granted a waiver later. TENEX’s notice was based on their intention to honor their contracts, but they acknowledge this
could be overridden by the Kremlin. This deadline has now passed and the DOE is currently granting waivers to the ban. Multiple waivers
have been partially or fully approved, however the details are not in the public domain.
On May 21, 2024, the DOE published their process and instructions for
requesting a waiver. The waiver process does not appear restrictive and will likely allow most of the previously contracted Russian material
into the United States prior to January 1, 2028. The U.S. legislative intentions were to deprive Russia of the revenue associated with
U.S. purchases of Russian nuclear fuel and counter Russia’s control of the global nuclear fuel cycle by flooding U.S. and international
markets with state-supported Russian uranium and services.
We continue to believe the shift away from Russia/Rosatom
will be a major catalyst in the realignment of nuclear fuel markets which will benefit western producers.
OVERVIEW OF THE URANIUM INDUSTRY
The only significant commercial use for uranium
is as a fuel for nuclear power plants for the generation of electricity. The global nuclear and uranium mining industries continue to
benefit from the convergence of multiple trends and increased public, political and government support due to coming new technologies,
climate change initiatives, and energy crisis shortages. These are resulting in extensions to operating lives, a large number of nuclear
reactors under construction, new builds, investments in next generation nuclear technology, and in Japan, increased urgency to re-start
the nuclear reactor fleet. Additionally with the rapid expansion of artificial intelligence (AI) the demand for electricity is surging,
particularly to power energy-intensive data centers. This increase in electricity consumption is driving greater reliance on nuclear power,
a reliable energy source, thereby strengthening the demand for uranium as a critical fuel for nuclear reactors.
The uranium market has historically been highly
cyclical. In the prior bull market, spot prices rose from $21 per pound in January 2005 to a high of $136 per pound in June 2007 in anticipation
of sharply higher projected demand as a result of a resurgence in nuclear power and the depletion of secondary supplies. Secondary supplies
are inventories of uranium not publicly available for sale, which 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 beginning in 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 spot prices entered a
steady decline until June 2014, when they rebounded slightly and peaked again in March 2015 at $39 per pound. After that peak, prices
again began to fall steadily, reaching their lowest point of $18 per pound in November 2016. Prior to COVID-19, annual uranium production
was at its lowest in over a decade, creating a global supply deficit where production was only about two-thirds of consumption. In May
2020, after COVID-19 related production shutdowns, spot prices hit a $34 per pound price before declining to close the year at $30 per
pound. During 2021, market participation by the Sprott Physical Uranium Trust and other secondary market uranium buyers caused prices
to rise to $42.05 per pound at December 31, 2021. Uranium prices held these levels until Russia’s invasion of Ukraine caused uranium
markets to surge. Prior to the invasion on February 24, 2022, uranium spot prices were in the $43 per pound range and rose to slightly
over $63 per pound by April 2022. Later in May 2022 and June 2022, the spot price receded to $45 levels, before recovering to the $50
+/- per pound price level in September 2022 to March 2023. Subsequently in July 2023, spot uranium increased from the approximately $50/lb
level to over $100/lb in January 2024. Since January 2024, spot uranium had a slow decline from a high of $100/lb level to $64/lb level
at the end of March 2025.
Geopolitical events, technological advances, and the nuclear energy
growth path provide favorable pricing factors specific to the uranium industry. As a result, we foresee a uranium pricing environment
which in the coming years will allow Western to initiate full-scale production at its best properties. As a result, Western made the largest
investments in the Company’s history during 2024, advancing its operational strategy and mining operations.
8
Nuclear Fuel and Uranium Market Conditions
During the year ended December 31, 2024, the spot uranium price decreased
$18 from $91 to ~$73. Notably, the long-term price increased from $68 to ~$81 during a period of rising conversion and enrichment services
prices. However, this follows an extremely strong period in the market where spot uranium prices have reacted to supply/demand constraints
and geopolitical risks. Since January 2024, spot uranium had a slow decline from a high of $100/lb level to $64/lb level at the end of
March 2025. The events of 2022 set in motion uranium market and nuclear fuel opportunities for the next decade and beyond. There are positive
catalysts across multiple levels of the nuclear fuel and uranium markets. Underlying fundamentals are the strongest in decades. This is
attributable to multiple factors, including climate change, energy security, supply chain and energy scarcity initiatives. The supply/demand
imbalance has flipped from a market with excess supply into a market with excess future demand. With the reduced availability of secondary
supplies, utilities have begun adding multi-year contracts with mining companies for primary supply. The drivers expanding the demand
for nuclear fuel include non-nuclear nations adding nuclear power generation, nuclear nations expanding fleets and/or extending lives
of existing reactors, idled nuclear reactors being redeployed, the reversal of phase-outs and shutdowns, and the deployment of advanced
reactors / SMRs. However, the challenge is in meeting increasing demand simultaneously with supply constraints from the world’s
largest suppliers. We believe uranium equity prices will continue to strengthen and reflect the underlying positive fundamentals in the
nuclear/uranium sector. Multiple market analysts have flagged low availability of mobile secondary inventories. We believe the continued
draw down of inventories to be a market catalyst for uranium prices.
Positive nuclear energy news has continued to
highlight the global growth of future nuclear electricity generation which will drive increased nuclear fuel demand. In terms of future
supply, utility contracting has continued into 2024, and some uranium mining companies are moving toward restarting production. However,
due to the lead time needed for future uranium production, we are entering a phase where the supply-demand fundamentals are in a deep
multi-year structural supply deficit. The future is not clear as we believe some miners with available near-term production are waiting
for higher price levels and/or project funding before making full start-up commitments. Utilities are also deferring contracting to understand
how regulations and geopolitics will modify their future access to Russian uranium, conversion and enrichment services.
In the second quarter of 2024, investors began
purchasing nuclear and uranium equities as a means to create long exposure for their positive view on Artificial Intelligence (AI), due
to the vast energy requirements of data centers. Recent transactions have been announced as tech giants Microsoft, Amazon, and Google
have sought deals to source nuclear power for their data centers from full scale reactors and SMRs. Microsoft most prominently signed