Item 3. Legal Proceedings
ITEM 3. LEGAL PROCEEDINGS
Other than described below, management is not aware of any material
legal proceedings that are pending or that have been threatened against us or our subsidiaries or any of our respective properties,
and none of our directors, officers, affiliates or record or beneficial owners of more than 5% of our common shares, or any associate
of any such director, officer, affiliate or shareholder, is (i) a party adverse to us or any of our subsidiaries in any legal proceeding
or (ii) has an adverse interest to us or any of our subsidiaries in any legal proceeding.
The Company is subject to periodic inspection
by certain regulatory agencies for the purpose of determining compliance by the Company with the conditions of its licenses. In
the ordinary course of business, minor violations may occur; however, these are not expected to result in material expenditures
or have any other material adverse effect on the Company.
A prior owner of the Van 4 Mine had been
granted a first Temporary Cessation from reclamation of the mine by the Colorado Mined Land Reclamation Board (“MLRB”)
which was set to expire June 23, 2017. Prior to its expiration, PRM formally requested an extension through a second Temporary
Cessation. PRM subsequently participated in a public process which culminated in a hearing on July 26, 2017. Prior to the hearing,
three non-profit organizations who pursue environmental and conservation objectives filed a brief objecting to the extension. The
MLRB board members voted to grant a second five-year Temporary Cessation for the Van 4 Mine. Thereafter, the three objecting parties
filed a lawsuit on September 18, 2017. The MLRB was named as the defendant and PRM was named as a party to the case due to the
Colorado law requirement that any lawsuit filed after a hearing must include all of the parties in the proceeding. The plaintiff
organizations are seeking for the court to set aside the board order granting a second five-year Temporary Cessation period to
PRM for the Van 4 Mine. The Colorado state Attorney General was defending this action in the Denver Colorado District Court. On
May 8, 2018, the Denver Colorado District Court ruled in favor, whereby the additional five-year temporary cessation period was
granted. The Plaintiffs appealed this ruling to the Colorado Court of Appeals and on July 25, 2019 the ruling was reversed, ruling
that the additional five-year temporary cessation period should not have been granted.
The MLRB and the Colorado Attorney General advised Western that it
will not make an additional appeal of the ruling. Further, the time period for an appeal has passed. The Judge has subsequently issued
an instruction for the MLRB to issue an order revoking the permit and putting the Van 4 Mine into reclamation. On January 22, 2020, the
MLRB held a hearing and on March 2, 2020, the MLRB issued an order vacating the Van 4 Temporary Cessation, revoking the permit and ordered
commencement of final reclamation, which must be completed within five (5) years. The Company commenced reclamation of the Van 4 Mine
but progress has been delayed both by COVID-19 restrictions and countywide fire and open flame restrictions. The reclamation cost is fully
covered by the reclamation bonds posted upon acquisition of the property.
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On February 4, 2020, the Colorado DRMS sent a
Notice of Hearing to Declare Termination of Mining Operations related to the status of the mining permits issued by the state of Colorado
for the Sunday Mine Complex. At issue is the application of an unchallenged Colorado Court of Appeals Opinion for a separate mine (Van
4,) with very different facts that are retroactively modifying DRMS rules and regulations. The Company maintains that it was timely in
meeting existing rules and regulations. The hearing was scheduled to be held during several monthly MLRB Board meetings, but this matter
has been delayed several times. The permit hearing was held during the MLRB Board monthly meeting on July 22, 2020. At issue was the status
of the five existing permits which comprise the Sunday Mine Complex. Due to COVID restrictions, the hearing took place utilizing a virtual-only
format. The Company prevailed in a 3 to 1 decision which acknowledged that the work completed at the Sunday Mines under DRMS oversight
was timely and sufficient for Western to maintain these permits. In a subsequent July 30, 2020 letter, the DRMS notified the Company that
the status of the five permits (Sunday, West Sunday, St. Jude, Carnation, and Topaz) had been changed to Active status effective June
10, 2019, the original date on which the change of the status was approved. On August 23, 2020, the Company initiated a request for temporary
cessation status for the Sunday Mine Complex as the mines had not be restarted within a 180-day window due to the direct and indirect
impacts of the COVID-19 pandemic. Accordingly, a permit hearing was scheduled for October 21, 2020 to determine temporary cessation status.
In a unanimous vote, the MLRB approved temporary cessation status for each of the five Sunday Mine Complex permits (Sunday, West Sunday,
St. Jude, Carnation, and Topaz). On October 9, 2020, the MLRB issued a board order which finalized the findings of the July 22, 2020 permit
hearing. On November 12, 2020, a coalition of environmental groups filed a lawsuit against the MLRB seeking a partial appeal of the July
22, 2020 decision by requesting termination of the Topaz Mine permit. Management anticipates joining with the MLRB in defense of their
July 22, 2020 decision.
ITEM 4. MINE SAFETY DISCLOSURES
For Western, safety is a core value, and
we strive for superior performance. Our health and safety management system, which includes detailed standards and procedures for
safe production, addresses topics such as employee training, risk management, workplace inspection, emergency response, accident
investigation, and program auditing. In addition to strong leadership and involvement from all levels of the organization, these
programs and procedures form the cornerstone of safety at Western, ensuring that employees are provided a safe and healthy environment
and are intended to reduce workplace accidents, incidents and losses, comply with all mining-related regulations and provide support
for both regulators and the industry to improve mine safety.
The operation of our U.S. based mine is
subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and
Health Act of 1977 (the “Mine Act”). MSHA inspects our mine on a regular basis and issues various citations and orders
when it believes a violation has occurred under the Mine Act Following passage of The Mine Improvement and New Emergency Response
Act of 2006, MSHA significantly increased the number of citations and orders charged against mining operations. The dollar penalties
assessed for citations issued has also increased in recent years.
Western is required to report certain mine
safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection
Act and Item 104 of Regulation S-K, and that required information is included in Exhibit 95 and is incorporated by reference in
this Annual Report.
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PART IV
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.