ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The information disclosed in this annual report,
and the information incorporated by reference herein, includes “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations,
hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking.
The forward-looking statements contained
or incorporated by reference in this annual report are based on our current expectations and beliefs concerning future developments and
their potential effects on us and speak only as of the date of each such statement. There can be no assurance that future developments
affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of
which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those
expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors
described in Item 1A, “Risk Factors” and this Item 7 of this annual report. Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under applicable securities laws.
The following discussion should be read in conjunction
with our audited consolidated annual financial statements and footnotes thereto contained in this annual report.
Overview
General
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 reconstituted its board of directors and senior management team. Western is a Canadian domestic issuer and Canadian
reporting issuer.
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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 St. 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, 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.
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.
The Company has registered offices at 5 Church
Street, Toronto, Ontario, Canada, M5E 1M2, and its common shares are listed on the CSE under the symbol “WUC” and are traded
on the OTCQX Best Market under the symbol “WSTRF”. Its principal business activity is the acquisition and development of uranium
and vanadium resource properties in the states of Utah and Colorado in the United States of America (“United States”).
Recent Developments
Ore Purchase Agreement
On April 8, 2025, PRM entered into an Ore Purchase Agreement (the “Ore
Purchase Agreement”) with subsidiaries of Energy Fuels Inc. (“Purchaser”). The Ore Purchase Agreement is for a one year
period and provides for the delivery of up to 25,000 short tons of uranium bearing ore to the White Mesa Mill in Blanding, Utah. PRM shall
make deliveries at its own cost and the purchase price per ton will be based upon the average grade of uranium within each lot, and other
qualifying conditions. Within 30 days after each lot is closed, the Purchaser shall pay to PRM an 85% provisional payment calculated based
upon the sampled grade and an agreed upon pricing schedule. Within 30 days after each lot is fed to processing, the Purchaser shall pay
to PRM a final settlement payment calculated based upon the assayed grade and the agreed upon pricing schedule, net of a royalty, pursuant
to a previously existing royalty agreement with the Purchaser.
46
Mustang Mineral Mill Site Acquisition
On October 1, 2024, Western, through its wholly
owned subsidiary, Western Utah, executed a binding stock purchase 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.
The Company assumed an obligation to an unrelated
third party to remit a royalty based on the volume of minerals processed through any mineral processing plant located on the property.
George Glasier, the President, CEO and a director
of Western, and his wife Kathleen owned 50% of the shares of PRC and Andrew Wilder, a director of Western, indirectly owned 3% of the
shares of PRC, and so the transaction was considered a related party transaction. The Company’s Board of Directors established an
independent committee of the Board comprised of directors who were not considered to have an interest in the transaction, and the independent
committee oversaw the negotiation and approved the entering into the agreement on behalf of the Company.
The total purchase price of PRC was $1.98 million, which consisted
of an aggregate of $829,167 in payments to former PRC shareholders for their equity interests and outstanding loans made to PRC and related
accrued interest and a $1,148,125 payment for principal and interest to a third party in satisfaction of an assumed liability of Mustang.
For the 53% ownership of PRC, $414,584 was paid to George Glasier and $24,875 was paid to an affiliate of Andrew Wilder.
The transaction was accounted for as a purchase
of an asset.
Mustang Mineral Processing Plant
Our current plans call for the permitting and construction of a mineral
processing plant at its newly acquired site in Colorado. Western expects to benefit from the prior site owner’s completion of all
phases of licensing and permitting of their 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. This mill is expected to have a cost of approximately $75 million
and is planned 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 available financing, the processing of uranium and vanadium materials
is targeted to commence in 2029.
Bullen Property (Weld County)
In 2017, the Company entered into an oil and gas
lease that became effective with respect to minerals and mineral rights owned by the Company of approximately 160 surface acres of the
Company’s mining property in Colorado. As consideration for entering into the lease, the lessee has agreed to pay the Company a
royalty from the lessee’s revenue attributed to oil and gas produced, saved, and sold attributable to the net mineral interest.
The Company has also received cash payments from the lessee related to the easement that the Company is recognizing incrementally over
the eight year term of the easement.
47
On June 23, 2020, the operator elected to extend
the oil and gas lease easement for three additional years through July 2023. This was done to provide additional time in order to complete
well construction and commence oil and gas production. During 2021, the operator completed a first set of eight (8) wells which commenced
oil and gas production by August 2021. During 2022, the operator completed a second set of eight (8) wells which commenced oil and gas
production by August 2022. All sixteen (16) wells remain in production and monthly royalty payments will be ongoing in perpetuity as long
as oil and/or gas are produced from the pooled unit containing these sixteen (16) wells.
During the years ended December 31, 2024 and 2023,
we recognized aggregate revenue of $183,803 and $431,065, respectively, under these oil and gas lease arrangements.
Kinetic Separation Licensing
On December 1, 2016 a determination was made by
the CDPHE considering the NRC Advisory Opinion, the Colorado public meeting process, and the CDPHE regulatory and evaluation framework.
This determination stated that the proposed Kinetic Separation operations at the Sunday Mine by Black Range Minerals must be regulated
by the CDPHE through a milling license. Previously, the Company was unable to deploy Kinetic Separation as it was without a regulatory
framework, but as a result of this determination the Company is now able to deploy Kinetic Separation under a milling license. The Colorado
milling license that Western is currently seeking will likely incorporate Kinetic Separation via an amendment to the initial license –
as Western’s current plan is to submit a licensing application that is substantially identical to the application that was used
previously for the Pinon Ridge Mill (which did not include the Company’s Kinetic Separation technology).
Stockpiled Mined Materials Inventory
From December 2021 through March 2022, 3,140 tons of uranium/vanadium
material was mined from the Sunday Mine Complex. The mining contractor calculated uranium grades based upon scintillometer sampling of
each 10-ton truckload and vanadium quantities were derived by applying the 6:1 historical ratio. The estimated stockpiled inventory is
50,289 pounds of uranium and 301,736 pounds of vanadium. The value of this stockpile is not reflected as an asset on the balance sheet
as the costs to produce the stockpiled inventory was expensed in accordance with Regulation SK-1300. The in-house mining team stockpiled
limited quantities of additional mined material in the current year. It is Western’s intent to sell some of this stockpiled material
to Energy Fuels under the Ore Purchase Agreement.
November 2024 Private Placement
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.
Incentive Stock Option Plan
The Company maintains an Incentive Stock Option
Plan (the “Plan”) that permits the granting of stock options as incentive compensation.
Stock Option Grants
On December 20, 2023, the Board of Directors
granted options under the Plan for the purchase of an aggregate of 1,525,000 common shares to individuals consisting of directors
and officers of the Company. Each of these options have a term which ends five years from the vesting date, an exercise price of
$1.20 (CAD $1.60 as of December 31, 2023) and vest equally in thirds on January 31, 2024, July 31, 2024 and January 31, 2025.
On July 14, 2024, the Board of Directors granted
an option under the Plan for the purchase of an aggregate of 100,000 common shares to a director of the Company. This option has a term
which ends five years from the vesting date, an exercise price of $1.47 (CAD $2.00 as of July 14, 2024) and vests one half on each of
July 31, 2024 and January 31, 2025.
On November 24, 2024, the Board of Directors granted options under
the Plan for the purchase of an aggregate of 1,375,000 common shares to individuals consisting of directors and officers of the Company.
Each of these options have a term which ends five years from the vesting date, an exercise price of $0.94 (CAD $1.32 as of November 29,
2024) and vest equally in thirds on January 31, 2025, July 31, 2025 and January 31, 2026.
48
Biden-Harris, Trump
1.0 and Trump 2.0 Administration Initiatives
During the first Trump Administration, the U.S. government focused
on market distortions caused by foreign state-owned enterprises and the economic and geopolitical influence lost by allowing Russia and
China to take the global lead in nuclear power. In support of the world’s largest nuclear reactor fleet, the U.S. has implemented
some of the recommendations of the Nuclear Fuel Working Group which followed the uranium Section 232 investigation. The Russia/Ukraine
war has highlighted the nuclear fuel supply chain risks and the geopolitical risks of dependence on the direct and indirect sourcing of
nuclear fuel from state owned enterprises in Russia and former Soviet Union republics. This led to the implementation of the Uranium Reserve
Program where the U.S. Department of Energy (“DOE”) purchased 1,100,000 lbs of U.S. domestic origin uranium in the first
quarter of 2023.
Upon taking office, the Biden-Harris Administration
team immediately rejoined the Paris Climate Accord, reversed a number of pro-fossil fuel energy policies, and gave all agencies climate
change initiatives. The Administration continued to advance a national clean energy standard. U.S. utilities were expected to be required
to produce an increasing proportion of electricity generation from clean energy power sources. On August 16, 2022, the Inflation Reduction
Act was signed into law authorizing governmental investments of approximately $369 billion in climate and energy, a portion of which would
benefit the U.S. domestic nuclear industry and battery technologies.
On November 5, 2024, the United States held a highly contested Presidential
election between Republicans (Trump-Vance) and Democrats (Harris-Walz). The Trump-Vance Republican ticket won, returning former President
Donald Trump to the Presidency on January 20, 2025. In addition, Republicans have achieved Congressional majorities in both the
Senate and House of Representatives. As a result, President Trump’s legislative priorities will likely face less resistance in Congress.
Currently, nuclear energy enjoys bipartisan support. With the change in Presidential Administrations, we are already observing the climate
change and clean energy initiatives of the Biden-Harris Administration being de-emphasized. In his first day in office, President Trump
signed Executive Orders declaring a National Energy Emergency and a U.S. withdrawal from the Paris Climate Agreement for a second time.
The new Administration is seeking a reduction in the federal government’s size and regulatory power, and the newly-established Department
of Government Efficiency (DOGE) has implemented workforce layoffs with the goal of a federal government headcount reduction. On February
14, 2025, President Trump signed an Executive Order creating the National Energy Dominance Council. On March 20, 2025 to boost domestic
production of critical minerals and reduce reliance on foreign imports, President Trump signed an Executive Order titled “Immediate
Measures to Increase American Mineral Production.” On April 9, 2025, President Trump signed an Executive Order entitled “Zero-based
Regulatory Budgeting to Unleash American Energy” to reduce costs on energy production by requiring conditional sunset dates for
regulations. However, these positive developments for domestic energy have been overshadowed by the announcements of U.S. tariffs and
reciprocal tariffs on the U.S.’s largest trading partners. Tariffs have been implicated as the driver of volatility across global
capital markets. Subsequently, President Trump authorized a 90-day pause on reciprocal tariffs and instead implemented a flat 10% tariff
while the pause is in effect. This action calmed markets. Most countries benefited from this pause; however, it was implemented in parallel
with an increase on Chinese tariffs, and thus escalated a U.S. – China trade war.
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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 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. 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
an agreement with Constellation Energy to restart a Three Mile Island reactor in Pennsylvania and purchase 100% of the power generated
for two decades.
Nuclear Fuel Supply Chain Concentration
Risks
Russia’s invasion of Ukraine and the ensuing
global energy crisis has focused attention on security of supply and supply chain risks. This has caused most of the world to re-evaluate
their dependence upon nuclear fuel exported by Russia. In spite of the dominant market position of Rosatom, future deliveries potentially
could be at risk due to sanctions, legislation, or a Russian embargo. Customer dependence upon the Russian supply of uranium, conversion
and enrichment are being addressed slowly by governments as alternative suppliers are not currently available. Both Urenco and Orano have
announced that they will invest to expand their uranium enrichment capacity respectively in the United States and France, which represents
a shift away from Russia. Utilities are demonstrating their desire for increased security of their nuclear fuel supply chains. Kazakhstan
is also a concern because the world’s largest uranium producing country has an unguarded and the second longest continuous land
border in the world shared with Russia. The potential exists for Russia to exert influence over Kazakhstan. Additionally, Kazatomprom
has put large long-term contracts in place with China. This supply is needed for China to fulfill its 15 year plan to deploy 150 new nuclear
reactors. China National Nuclear Corp. (CNNC) has recently opened a uranium trading hub /warehouse facility, on the China / Kazakhstan
border, with the capacity to store 60 million pounds of uranium. It has become evident that the nuclear fuel supply chain has become increasingly
concentrated and interconnected in this very small area of the world. Expanding Kazakhstan uranium exports to Russia and China significantly
reduces future supply for Western nuclear fuel buyers.
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. The conflict has an anti-French sentiment,
and 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 acquires 20% of its natural uranium from Niger. In addition
to the French evacuating/ being expelled from Niger, the U.S. military also departed the country. The Junta is utilizing Russian military
support as a replacement. In addition, the Niger government has revoked operating permits from foreign uranium companies, including Orano
in June 2024 and Goviex in July 2024. In November 2024, Orano further reported that it had lost operational control, to authorities in
Niger, of another of its uranium mines. This mine was in production, but had been impacted by export restrictions imposed by the Junta.
During October 2023, geopolitical instabilities spread further to the
Middle East after a Hamas attack on Israel triggered a counterattack by Israel on the Gaza Strip. The Israel-Hamas hostilities have escalated
over the Summer of 2024 and then spread to other countries in the Middle East. At the beginning of 2025, Israel and Hamas agreed to a
ceasefire which ended in March 2025; the hostilities resumed in March and it’s not clear when and if the combatants will be able
to negotiate a new ceasefire or an end to military actions. This additional hot spot further increases volatility in the world and destabilizes
the Middle East region that is highly influential on global energy prices.
50
Results of Operations
Year Ended December 31, 2024 as
Compared to the Year Ended December 31, 2023
The following table presents the Company’s
financial results for the years ended December 31, 2024 and 2023.
For the Years Ended December 31,
Expenses
Other comprehensive (loss) income
51
Summary:
Our consolidated net loss for the years
ended December 31, 2024 and 2023 was $10,112,037 and $4,942,594, respectively. The principal components of these year over year
changes are discussed below.
Our comprehensive loss for the years ended Decembers
31, 2024 and 2023 was $10,271,899 and $4,755,471, respectively.
Revenues
Revenues for the year ended December 31, 2024
were $183,803 as compared to $431,065 for the year ended December 31, 2023. The decrease in revenues of $247,262, or 57%, was primarily
related to lower production volumes from the oil and gas wells due to short-term well-pad maintenance shutdown in the second quarter and
lower well performance attributable to production decline curves during the year ended December 31, 2024 as compared to the year ended
December 31, 2023.
Mining Expenditures
Mining expenditures for the year ended December
31, 2024 were $5,285,140 as compared to $2,951,579 for the year ended December 31, 2023. The increase in mining expenditures of $2,333,561,
or 79%, was principally attributable to the scaling up of mining activities at the Sunday Mine Complex, which involved the hiring of additional
mining personnel, increased mining services and supplies costs, and increased maintenance and depreciation costs for mining equipment
and vehicles placed into service.
Professional Fees
Professional fees for the year ended December
31, 2024 were $613,403 as compared to $386,473 for the year ended December 31, 2023. The increase in professional fees of $226,930, or
59%, was primarily due to increased accounting and legal costs in connection with an elevated level of business, mining and acquisition
activities.
General and Administrative
General and administrative expenses for the year
ended December 31, 2024 were $3,599,460 as compared to $1,884,456 for the year ended December 31, 2023. The increase in general and administrative
expenses of $1,715,004, or 91%, is primarily due to increases in employee headcount and compensation, employee benefits, non-cash stock-based
compensation and insurance costs in connection with increased mining activities.
Consulting Fees
Consulting fees for the year ended December 31,
2024 were $1,020,577 as compared to $304,457 for the year ended December 31, 2023. The increase in consulting fees of $716,120 was due
to the costs incurred during the period for the licensing and permitting of the mineral processing plant sites in Utah and Colorado.
Interest Income, Net
Interest income, net for the year ended December
31, 2024 was $224,738 as compared to $158,904 for the year ended December 31, 2023. The increase in interest income, net of $65,834, or
41%, was principally attributable to higher interest rates earned on higher cash balances during the year ended December 31, 2024 compared
to the year ended December 31, 2023.
Other Expense, Net
Other expense, net for the year ended December
31, 2024 was $1,998 as compared to $5,598 for the year ended December 31, 2023. The decrease in other expense, net was primarily due to
a lower loss on the sale of a used vehicle during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Foreign Currency Translation Adjustment
Foreign currency translation adjustment for the year ended December
31, 2024 was a loss of $159,862 as compared to a gain of $187,123 for the year ended December 31, 2023. The change in foreign currency
translation adjustment is primarily due to the weakening of the CAD against the USD.
52
Liquidity and Capital Resources
Our cash and cash equivalents and restricted cash
balance as of December 31, 2024 was $6,295,624. Our cash position is highly dependent on our ability to raise capital through the issuance
of debt and equity and our management of expenditures for mining and for the development of our mineral processing mill and for the fulfillment
of our public company reporting responsibilities. Our management believes that in order to finance the development and mining operations
of the mining properties, to construct our Kinetic Separation equipment and operations and to secure regulatory licenses for and to construct
our uranium and vanadium minerals processing facilities, we will be required to raise additional capital by way of debt and/or equity.
We will also require additional working capital to continue to scale-up our mining operations at the Sunday Mine Complex. This outlook
is based on our current financial position and is subject to change if opportunities become available based on current exploration program
results and/or external opportunities.
Net Cash Used In Operating Activities
Net cash used in operating activities was $8,297,043
for the year ended December 31, 2024, as compared with $4,089,495 used in operating activities for the year ended December 31, 2023. The
increase of $4,207,548 in cash used in operating activities was principally driven by an increase in net loss of $5,169,443, offset by
an increase of $713,112 in stock-based compensation and an increase of $350,778 in depreciation.
Net Cash Used In Investing Activities
Net cash used in investing activities was $3,391,888
for the year ended December 31, 2024, as compared with $2,404,440 for the year ended December 31, 2023. The increase in cash used in investing
activities of $987,448 was principally due to the purchase of land for the Mustang mill site of $1,982,093 in connection with the acquisition
of PRC.
Net Cash Provided By Financing Activities
Net cash provided by financing activities was
$8,152,328 for the year ended December 31, 2024, as compared with $5,844,411 for the year ended December 31, 2023. The increase in cash
provided by financing activities of $2,307,917 was principally due to a $3,601,414 increase in proceeds from warrant exercises, partially
reduced by a $1,289,997 decrease in aggregate net proceeds from the private placement during the calendar year 2024 as compared to the
calendar year 2023.
Asset Retirement Obligations
Our mines are subject to certain AROs, which we
have recorded as liabilities. The AROs of the United States mines are subject to legal and regulatory requirements and estimates of the
costs of asset retirement obligations are reviewed periodically by the applicable regulatory authorities. The ARO represents our best
estimate of the present value of future reclamation costs in connection with the mineral properties.
During the year ended December 31, 2024, in connection
with our San Rafael Mine and Sunday Mine Complex, we incurred additional gross and discounted asset retirement obligations of $412,534
and $80,508, respectively. We determined the aggregate gross ARO of the mineral properties to be $1,163,978 and $751,444 as of December
31, 2024 and December 31, 2023, respectively. The portion of the asset retirement obligation related to the Van 4 Mine, which is in reclamation
as of December 31, 2024, and its related restricted cash are included in current liabilities and current assets, respectively, at a value
of $75,057. During the year ended December 31, 2024, our internal mining operations team has been performing the Van 4 Mine reclamation
work, and the State of Colorado has not yet reduced the associated asset retirement obligation amount.
The Company’s asset retirement obligations
are subject to legal and regulatory requirements. Estimates of the costs of reclamation are reviewed periodically by the Company and the
applicable regulatory authorities. The asset retirement obligations represent the Company’s estimate of the present value of future
reclamation costs, discounted using a credit adjusted risk-free interest rates of 5.4% for the years ended December 31, 2024 and 2023.
The net discounted aggregated values as of December 31, 2024 and 2023 were $410,098 and $316,619, respectively. On September 17, 2024
and March 13, 2025, the Company remitted $61,403 and $351,131, respectively in connection with the aforementioned 2024 incremental AROs.
Financial warranties to secure AROs as of December 31, 2024 and 2023 were $812,993 and $751,444, respectively.
53
Oil and Gas Lease and Easement
In 2017, we entered into an oil and gas lease
that became effective with respect to minerals and mineral rights owned by us of approximately 160 surface acres of our property in Colorado.
As consideration for entering into the lease, the lessee has agreed to pay us a royalty from the lessee’s revenue attributed to
oil and gas produced, saved, and sold attributable to the net mineral interest. We have also received cash payments from the lessee related
to the easement that we are recognizing incrementally over the eight year term of the easement.
On June 23, 2020, the same entity as discussed
above elected to extend the oil and gas lease easement for three additional years, through July 2023. This was done to provide additional
time in order to complete well construction and commence oil and gas production. During 2021, the operator completed a first set of eight
(8) wells which commenced oil and gas production by August 2021. During 2022, the operator completed a second set of eight (8) wells which
commenced oil and gas production by August 2022. All sixteen (16) wells remain in production and monthly royalty payments will be ongoing
in perpetuity as long as oil and/or gas are produced from the pooled unit containing these sixteen (16) wells.
During the years ended December 31, 2024 and 2023,
we recognized aggregate revenue of $183,803 and $431,065, respectively, under these oil and gas lease arrangements.
Related Party Transactions
We have transacted with related parties pursuant
to service arrangements in the ordinary course of business, as follows:
Prior to the acquisition of Black Range, Mr. 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 technology. We assumed this contingent payment obligation in connection with the acquisition of Black Range.
At the date of the acquisition of Black Range, this contingent obligation was determined to be probable. Since the deferred contingent
consideration obligation is probable and the amount is estimable, we recorded the deferred contingent consideration as an assumed liability
in the amount of $309,138 and $340,650 as of December 31, 2024 and 2023, respectively.
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 an 880 acre property located in Montrose County, Colorado, where a uranium processing plant was previously
licensed but never constructed. George Glasier, the President, CEO and a director of Western, and his wife Kathleen owned 50% of the shares
of PRC, and Andrew Wilder, a director of Western, indirectly owned 3% of the shares of PRC. Therefore, this transaction constitutes a
related party transaction. The Company’s Board of Directors established an independent committee of the Board, comprised of directors
who are not considered to have an interest in the transaction. The independent committee of the Board oversaw the negotiation and approved
the entering into the PRC Agreement on behalf of Western. Of the total cash paid to the sellers, $414,584 was paid to George Glasier and
$24,875 was paid to an affiliate of Andrew Wilder.
We have multiple lease arrangements with Silver
Hawk Ltd., an entity which is owned by George Glasier and his wife Kathleen Glasier. These leases, which are all on a month-to-month basis,
are for our rental of office, workshop, warehouse and employee housing facilities. We incurred rent expense of $106,500 and $71,700 in
connection with these arrangement for the years ended December 31, 2024 and 2023, respectively.
During the years ended December 31, 2024 and 2023,
we purchased equipment from Silver Hawk Ltd. for $9,000 and $25,800, respectively.
We are obligated to pay Mr. Glasier for reimbursable
expenses in the amount of $83,554 and $84,040, included within accounts payable and accrued expenses, as of December 31, 2024 and 2023,
respectively.
54
Going Concern
With the exception of the quarter ended June 30,
2022, we had incurred losses from our operations. During the years ended December 31, 2024 and 2023, we generated net losses of $10,112,037
and $4,942,594, respectively. We expect to generate operating losses for the foreseeable future as we incur expenses to bring our mineral
processing facilities online and further expand our mining operations. As of December 31, 2024 and 2023, we had an accumulated deficit
of $28,929,894 and $18,817,857, respectively, and working capital of $5,240,584 and $8,970,434, respectively.
Since inception, we have met our liquidity requirements
principally through the issuance of notes, the sale of our common shares and from limited revenue sources. During the year ended December
31, 2024, we received $4,605,458 in proceeds from the exercise of our common share warrants. During November 2024, we closed a brokered
private placement of 4,142,906 units at a price of $0.94 (CAD $1.32) per unit. The aggregate net proceeds raised in the private placement
amounted to $3,546,870 (CAD $4,975,966).
Our ability to continue our operations and to
pay our obligations when they become due is contingent upon us obtaining additional financing. Management’s plans include seeking
to procure additional funds through debt and equity financings, to secure regulatory approval licenses to fully utilize our Kinetic Separation,
to permit and construct the Mustang Minerals Processing Plant for the processing of uranium and vanadium to generate operating cash flows.
We will also require capital to fund the ongoing in-house mining operations at the Sunday Mine Complex.
There are no assurances that we will be able to
raise capital on terms acceptable to us or at all, or that cash flows generated from our operations will be sufficient to meet our current
operating costs and required debt service. If we are unable to obtain sufficient amounts of additional capital, we may be required to
reduce the scope of our planned product development, which could harm our financial condition and operating results, or we may not be
able to continue to fund our ongoing operations. These conditions raise substantial doubt about our ability to continue as a going concern
to sustain operations for at least one year from the issuance of the accompanying financial statements. The accompanying consolidated
financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Off Balance Sheet Arrangements
As of December 31, 2024, there were no off-balance
sheet transactions. We have not entered into any specialized financial agreements to minimize our investment risk, currency risk or commodity
risk.
Critical Accounting Estimates and Policies
The preparation of these consolidated financial
statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities
at the date of the consolidated financial statements and reported amounts of expenses during the reporting period.
Significant assumptions about the future and other
sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment
to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, include, but are not
limited to, the following: fair value of transactions involving common shares, assessment of the useful life and evaluation for impairment
of intangible assets, valuation and impairment assessments of mineral properties and equipment, deferred contingent consideration, asset
retirement obligations, valuation of stock-based compensation, and HST. Other areas requiring estimates include allocations of expenditures,
depletion and amortization of mineral rights and properties.
55
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
This information appears following Item 16 of
this report and is included herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, our principal executive
officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on their evaluation of our
disclosure controls and procedures, our principal executive officer and principal financial officer concluded that our disclosure controls
and procedures were not effective as of December 31, 2024, to ensure that information required to be disclosed by the Company in the reports
that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in
the SEC’s rules and forms and (b) accumulated and communicated to management, including our principal executive officer and principal
financial officer, as appropriate to allow for timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial
Reporting
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over financial reporting is a process designed under the supervision and with
the participation of our management, including our chief executive officer and chief financial officer, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America.
As of December 31, 2024, our management assessed the effectiveness
of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission, or COSO, in Internal Control-Integrated Framework (2013). Based on this assessment, management, under the supervision and
with the participation of our chief executive officer and chief financial officer, concluded that, as of December 31, 2024, our internal
control over financial reporting was not effective based on those criteria.
56
Based upon its assessment as of December 31, 2024,
management identified the following material weaknesses in its internal control over financial reporting, inclusive of the control weakness
related to disclosure controls and procedures:
Remediation Efforts to Address Material Weaknesses
We have identified and implemented, and continue to implement, certain
remediation efforts to improve the effectiveness of our internal control over financial reporting. These remediation efforts are ongoing
and include the following measures to address the material weaknesses identified:
While we believe the steps taken to date will improve the effectiveness
of our internal control over financial reporting, we have not yet completed all of our planned remediation efforts.
Attestation Report
This annual report does not include an attestation
report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report
was not subject to attestation by our independent registered public accounting firm pursuant to a provision under the Dodd-Frank Wall
Street Reform and Consumer Protection Act that grants a permanent exemption for non-accelerated filers from complying with Section 404(b)
of the Sarbanes-Oxley Act of 2002.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting
identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred
during the Company’s fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 9C. DISCLOSURE
REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
The following table sets forth information regarding the members of
our board of directors (the “Board”) and our executive officers.
Name Age Position(s)
George Glasier 81 President, Chief Executive Officer and Director
Robert Klein 59 Chief Financial Officer
Michael Rutter 48 Chief Operating Officer (effective January 30, 2024)
Bryan Murphy 56 Director, Chairman
Andrew Wilder 54 Director
Michael Skutezky 77 Director (effective June 27, 2024)
Executive Officers
George Glasier, J.D., founded Western
Uranium & Vanadium Corp. and has served as a Director and as President and Chief Executive Officer since 2014. He has over thirty
years’ experience in the uranium industry in the United States, with extensive experience in sales and marketing; project development
and permitting uranium processing facilities. He is the founder of Energy Fuels Inc. (Volcanic Metals Exploration Inc.) and served as
its Chief Executive Officer and President from January 2006 to March 2010. He was responsible for assembling a first-class management
team, acquiring a portfolio of uranium projects, and leading the successful permitting process that culminated in the licensing of the
Piñon Ridge uranium mill; originally planned for construction in Western Montrose County, Colorado. He began his career in the
uranium industry in the late 1970’s with Energy Fuels Nuclear, which built and operated the White Mesa Mill near Blanding, Utah,
becoming the largest uranium producer in the United States.
Robert Klein has served as Chief
Financial Officer of Western Uranium & Vanadium Corp since 2016. He is in charge of accounting and finance, and is closely involved
in capital markets activities, corporate transactions, investor relations, public relations, and legal, and compliance. Formerly, Mr.
Klein served as Vice President Finance and had leading roles in reporting, corporate transactions, and Western’s public listings
on the CSE and OTCQX. Mr. Klein was formerly the Chief Operating Officer of Cross River Group and began his association with Western on
an Operating Partner basis after the formation of Western’s predecessor company, Pinon Ridge Mining, LLC. Previously, Mr. Klein was a
Managing Director at Analytical Research, an alternative investments research firm. He has a broad financial background derived from senior
operating and investment roles with asset managers and through Exeter Analytics, a consulting firm he founded. Mr. Klein was formerly
the CFO of Five Points Capital, a hedge fund spin-out from Soros Fund Management. After having begun his career in public accounting,
Mr. Klein worked for Lehman Brothers, an investment bank, and William E. Simon & Sons, a merchant bank and private investment firm.
Rob earned the Chartered Financial Analyst designation, received an M.B.A. from the Robert H. Smith School of Business at the University
of Maryland and a B.S. in Accounting from George Mason University.
Michael Rutter has served as the
Chief Operating Officer (“COO”) of Western Uranium & Vanadium since January 30, 2024. As COO, Mr. Rutter is in charge
of Western’s mining and milling operations; all operations teams report to Mr. Rutter. Mr. Rutter hires staff, procures equipment and
is responsible for the maintenance and scaling-up of activities at Western’s resource properties. Beginning in 2016 and until he was appointed
COO, Mr. Rutter served as Western’s Vice President of Operations, serving part-time until 2022 and then full-time since. In his
role as Vice President of Operations, Mr. Rutter was in charge of overseeing resource properties and the advancement of Kinetic Separation.
He was the project coordinator for the development of all of Western’s resource properties and spearheaded efforts at the Sunday
Mine Complex, and certain reclamation projects. During the prior period from 2014 to 2016, Mr. Rutter provided services to Western as
a consultant on a part-time basis. Mr. Rutter’s experience also included working for Veolia Nuclear Solutions Federal Services during
2014 through 2022, where Mr. Rutter oversaw electrical and mechanical operations at the Paradox Valley Unit of the Colorado River Basin
Salinity Control Program and working for Energy Fuels Inc. from 2007 through 2014 as Maintenance and Operations Superintendent in uranium
production in Utah, Colorado and Arizona.
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Non-Employee Directors
Andrew Wilder serves as a Director and the Chairman of the Audit Committee for Western
Uranium & Vanadium Corporation, positions he has held since 2014, and as a member of the Governance, Nominating & Compensation
Committee. He is the Founder and the Chief Executive Officer of Cross River Infrastructure Partners, a platform designed to accelerate
global sustainability through the development and construction of infrastructure projects deploying transformative industrial technologies.
Areas of focus include capturing and sequestering carbon emissions, generating green hydrogen and ammonia, generating clean power with
advanced small modular nuclear reactors, and up cycling bio-waste into renewable natural gas. Mr. Wilder is also currently a Board Member
for Bedford 2030, a community-based climate action non-profit organization for the Township of Bedford, New York. In 2011, prior to launching
Cross River Infrastructure Partners, Mr. Wilder founded and managed the Cross River Group, an advisory business providing capital and
business development services to alternative asset managers and institutions. In 2001, Mr. Wilder co-founded and served as Chief Operating
and Chief Financial Officer for North Sound Capital LLC, an equity hedge fund manager with $3 billion peak assets under management. Mr.
Wilder’s prior career included serving as a Manager in the audit group of Deloitte. Mr. Wilder received the Chartered Accountant
(Canada) designation, holds the CFA designation, and received an MBA from the University of Toronto and a BA from the University of Western
Ontario. Our board of directors believe that Mr. Wilder’s extensive experience in financial management and in the energy industry
qualifies him to serve on our board of directors.
Bryan Murphy has
served as a Director of Western Uranium & Vanadium Corp. since 2018 and serves on both the Audit Committee and the Governance,
Nominating & Compensation Committee. He is the founder of Magellan Limited, an advisory firm focusing on providing strategic,
M&A, and financial advisory services and currently serves as CFO and Head of Finance for Biome Renewables Inc., an early stage
renewable energy innovation and industrial design company. Formerly, Mr. Murphy was Co-Founder and Managing Partner of Quest
Partners, a boutique investment bank that focuses on the provision of M&A, corporate finance, and business strategy services. In
these capacities, Mr. Murphy has developed extensive international experience and relationships advising high-growth businesses
across North America, Europe, and the Middle East. In the prior dozen years, Mr. Murphy held senior management roles at Canadian
Tire Corporation overseeing divisions and business lines. Additionally, Mr. Murphy was formerly a board member of Covenant House
Toronto, one of Canada’s largest homeless youth agencies. Bryan has an Honours Bachelor of Arts in Business Administration
majoring in Finance and an MBA with Distinction from the University of Western Ontario Richard Ivey School of Business. Bryan earned
the ICD.D designation from the Rotman School of Management at the University of Toronto and the Institute of Corporate Directors.
Our board of directors believe that Mr. Murphy’s extensive experience in strategic and other advisory and executive leadership
qualifies him to serve on our board of directors.
Michael Skutezky was elected to
the Board of Directors in June 2024 and serves as the Chairman of the Governance, Nominating & Compensation Committee and as a member
of the Audit Committee. He brings over 40 years of experience as an officer, counsel, and director in the financial sector in Canada.
His career includes serving as Assistant General Counsel at Royal Bank of Canada, where he specialized in international and Canadian project
financing, and as Senior Vice President, Personal Trust at National Trust. Currently, Mr. Skutezky is the Chairman and sole shareholder
of Rhodes Capital Corporation, a firm that provides alternative financing solutions for small to mid-sized businesses and startups. The
Company specializes in business financing strategies designed to enhance working capital and cash flow. Since 2019, Mr. Skutezky has served
as Secretary and Senior Legal Counsel for Voyager Metals Inc. He has also been a Director of New Break Resources Ltd. since April 2014,
where he previously held the role of Corporate Secretary until stepping down in October 2021. However, he continues to serve as a Director.
Additionally, he has been a Director of Green Shift Commodities Ltd. since June 2022. Mr. Skutezky holds a B.A. in Business from Bishop’s
University and an LL.B. from Dalhousie Law School. He is a member of the Canadian and International Bar Associations and a non-practicing
member of the Law Society of Ontario. Our board of directors believe that Mr. Skutezky’s extensive legal, financial and uranium
industry experience qualifies him to serve on our board of directors.
59
Involvement of Officers and Directors in