Item 2. Properties
ITEM 2. PROPERTIES
Company headquarters is maintained through a lease at 330 Bay
Street, Suite 1400, Toronto, Ontario, Canada M5H 2S8.
An operations facility is rented at 31617 Hwy 90 Road, Nucla,
Colorado, USA 81424 which houses the Kinetic Separation units and an office.
1. Sunday Mine Complex
2. San Rafael
3. Sage
4. Dunn
5. Van 4
6. Hansen/Taylor Ranch
7. Bullen Property
16
PROPERTIES
We have no proven or probable reserves. However, as a company
incorporated in Canada we have provided below resources qualifying under National Instrument 43-101, for our Sunday Mines Complex
and our San Rafael Uranium Project.
On September 16, 2015, in connection with the Black Range Transaction,
the Company acquired additional mineral properties. The mining assets acquired through Black Range included assets in the states
of Colorado, Wyoming and Alaska. None of these mining assets are operational at this time. As these properties have not formally
established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized material
can be economically extracted as originally planned and anticipated.
The Company’s mining properties acquired on August 18,
2014 that the Company retains as of December 31, 2019, include: San Rafael Uranium Project located in Emery County, Utah; The Sunday
Mine Complex located in western San Miguel County, Colorado; The Van 4 Mine located in western Montrose County, Colorado; The Sage
Mine project located in San Juan County, Utah, and San Miguel County, Colorado USA, and the Dunn Project located in San Juan County,
Utah.
The Company’s mining properties acquired on September 16, 2015 that
the Company retains as of December 31, 2019, include Hansen, North Hansen, Hansen Picnic Tree, and Taylor Ranch, located in Fremont and
Teller Counties, Colorado. The Company also acquired the Keota project located in Weld County, Colorado, and Ferris Haggerty located in
Carbon County, Wyoming.
The near term plan for the Company’s resources is to mine
initially at the Sunday Complex. The Sunday Mine Complex is an advanced stage property with a significant drilling and production
history. Mining and drilling occurred contemporaneously from the 1950’s through the mid 1980’s. From the 1980’s
to the present, mining and drilling occurred only sporadically, typically when uranium or vanadium prices were high. The last provious
mining interval was from 2006 to 2009, and based on the available records, only in 2009 did surface any drilling take place since
mid-1980. Past operators have generated abundant geologic and mining data and there are open faces underground that show mineralized
zones.
Near term exploration is not needed because the underground
infrastructure has been already developed.
1.
Sunday Mines Complex
The Property
The Sunday Mine Complex
is located in western San Miguel County and is part of the Uravan Mineral Belt. The property is situated 25 miles north of Dove
Creek, Colorado, on the north flank of Disappointment Valley and portions of Big Gypsum Valley. Energy Fuels Resources (USA) Inc.
(“EFR”) acquired the property in June 2012 from Denison Mines Corp. The complex consists of five individual mines with
mine workings located along a two mile stretch of the southern side of Big Gypsum Valley, with underground workings extending generally
south, with associated vents and surface facilities. The mines are, from east to west: Sunday, Carnation, Saint Jude, West Sunday,
and Topaz. The mines were last previously actively mined from 2007 to 2009.
The property consists of 221 unpatented
claims on public land managed by the U.S. Bureau of Land Management (“BLM”) Tres Rios Field Office, covering
approximately 3,800 acres. The area covers parts of sections 10, 13, 14, 15, 23, 24, and 26 T44N
R18W, and sections 18, 19, 20, and 30 T44N R17W. Total annual BLM claim maintenance fee are approximately $34,255 due
September 1st each year. The property has access to grid power and has a natural underground source of water due to an aquifer.
As a mine that has produced in the recent past, the Sunday Mine Complex has a robust infrastructure. The roads are all-weather,
electric power is grid-tied, surface facility structures that meet Colorado State standards exist, and water is present. During
2019, a mine re-opening project was implemented at the Sunday Mine Complex to identify high-grade vanadium ore, followed by bulk
sampling and development drilling. Active mining was conducted and the extracted ore was stock piled underground in the mine. Each
of the five associated mining permits are in Temporary Cessation status.
GMG, Sunshine, and Patsun claims
(totaling twenty claims in the northeast portion of the property) carry a 12.5% royalty on all ore produced.
Accessibility
The property is best accessed from
Colorado. Access from Colorado is via State Highway 141 east out of Naturita, CO for about 3.7 mi (6 km) until the 141/145 Highway
junction, then about 22.4 mi (36 km) south on Hwy 141, then about 6.2 mi (10 km) northwest on County Road 20R (Gypsum Valley Road).
The State Highway 141 is a paved all-weather road and the County Road 20R is a gravel road passable in all but the worst weather.
17
History
The Sunday Mine Complex consists of
six different mines. These are the Topaz, West Sunday, Sunday, St. Jude, Carnation, and the GMG. The mines have had a number of
owners and operators. Maps and documents made available to the author show that the following companies have been involved in the
all or parts of the property prior to WUC acquisition of the SMC in April 2014: Matterhorn Mining (1950’s-1960’s, Climax
Uranium 1960’s, Union Carbide Corporation (UCC) 1970’s-1980’s, Atlas Minerals (1980’s), Energy Fuels Nuclear
(early 1990’s), International Uranium Corp. (1990’s-2000’s), Denison Mines (USA) (2000’s), and Energy Fuels
(2010’s). The documents are incomplete as so this list may be as well. Since UCC days, the ownership has been clear. In 1983
Union Carbide transferred its mineral interests to UMETCO, a wholly-owned subsidiary. For the sake of consistency, the name Union
Carbide will be used even if technically the ownership was UMETCO at the time.
Records made available by the Company
and a search of public documents on-line indicates exploration drilling starting on the property in the early 1950’s. Two
Defense Minerals Exploration Administration (DMEA) reports, one on the Sunday area and the other on the Topaz area, indicated some
drilling and minor surface extraction had occurred by the mid 1950’s (DMEA, 1953 & 1956). Additionally, historic
maps of the area show the Sunday mines in operation in the 1950’s (Denison Mines, 2008).
The records & anecdotal evidence
indicate that from the mid-1960’s until the early 1980’s, the SMC produced material from relatively steady ongoing
mining operations. These ceased in 1984 when Union Carbide closed their Uravan mill. Since then, the property has been idle, with
the exception of brief periods in the late 1980’s when UCC mined for a short time during a spike in vanadium prices, in the
mid-1990’s with International Uranium Corporation and another one in 2006-2009 when Denison Mines extracted ore from the
mine. During all three periods, the ore was processed at the White Mesa Mill located just south of Blanding, UT.
Exploration and development drilling
on the property was contemporaneous with the mining. The available database records show that at least 1,419 holes have been drilled
on the property. This is an incomplete list, as an examination of the available maps and cross-sections show a number of holes
that are not in the database. A best estimate for total distance drilled is about 850,100 ft (259,175 m). Anecdotal evidence and
some maps also give evidence that underground long holes (test holes drilled from the mine workings anywhere from 50 ft (15 m)
to 300 ft (91 m) long) were used extensively throughout the mined areas.
The 2-D digitized mine workings, done
by Denison Mines show extensive stopping and drifting within parts of the SMC. Generational mine maps indicate that more mine workings
exist than are shown in the digital database. A very conservative rough estimate of the linear mine workings based on the digital
database is in excess of 50,000 ft (15,244 m) with many stopes. Figure 6.2.1 shows the known drill hole and mine working locations.
Based on the records and on field inspection,
it is evident that the Property has a significant history of drill exploration and mine development.
Anthony R. Adkins, P. Geol., LLC was
commissioned by Western Uranium & Vanadium to prepare an Independent Technical Report compliant with the Canadian National
Instrument 43-101 on the Sunday Mine Complex Uranium (SMC) Project, an advanced-stage uranium property. The report was finalized
on July 7, 2015 and filed on sedar.com on July 16, 2015.
The report states that the Sunday Mine Complex has Measured
and Indicated Resources of 203,217 tons grading at 0.25% U3O8 containing 1,007,803 lbs U3O8 and Inferred Resources of 264,604 tons
grading at 0.36% containing 1,906,081 lbs U3O8. This Technical Report resource is an historic estimate under NI 43-101. The historic
mineral resource estimate was calculated by the area of influence method, which is a common way for resources in the Uravan Mineral
Belt to be estimated.
The Sunday Mine Complex Technical Report filed by Western Uranium &
Vanadium estimates mineral resources and not reserves. That report does not use categories other than “mineral resources”
and “mineral reserves”, and the Sunday Mine Complex property was reported as having no reserve quality mineralization.
There is no more recent or available data on the Sunday Mine Complex project resource than that of the Western Uranium &
Vanadium Technical Report from 2015. In order to disclose the historic resource as current, the Company needs to have completed
and filed an NI 43-101 technical report on sedar.com which includes discussion on the reasonable prospect for economic extraction
of the mineral resource. A qualified person (as understood under NI 43-101) has not done sufficient work to classify the historical
estimate as current mineral resources or mineral reserves, and the Company is not treating the historical estimate as current mineral
resources or mineral reserves. In order to upgrade or verify the historical estimate provided by the Western Uranium &
Vanadium Technical Report, the Company would have to engage a qualified person to, among other things, take account of any exploration
or other work on the Sunday Mine Complex since the date of the historical estimate and otherwise produce a report under NI 43-101.
Project Geology
Geologically, the main hosts for uranium-vanadium mineralization
in the Sunday Mine Complex are fluvial sandstone beds assigned to the upper part of the Salt Wash Member of the Jurassic Morrison
Formation, with minor production coming from conglomeratic sandstones assigned to the lower portion of the Brushy Basin Member
of the Morrison Formation. Mineralization from both members is present at the property, with the mine production coming from the
Salt Wash Member. Beds generally strike NW-SE and dip SW, with some exceptions within fault bounded blocks adjacent to Big Gypsum
Valley.
18
Restoration and Reclamation
Each of the mines are permitted separately
with the DRMS and are considered to be in temporary cessation status. The mines and their permitted acres and financial warranties are,
from east to west, the Sunday (60 acres, $330,242), Carnation (9.8 acres, $40,245), Saint Jude (9.8 acres, $69,828 ), West Sunday (12.1
acres, $85,036), and Topaz (30 acres, $99,893).
Permitting Status
The air permits for the site are currently
being renewed with APCD. A Stormwater permit is in place with the WQCD and a Stormwater Management Plan is in effect.
However, a mine water treatment plant will need to be permitted for treating mine water, as there is currently 55 million gallons of water
in the lower portion of the mine where most of the remaining resource is located. This will require a discharge permit with the DWQC and
revisions to the Plan of Operations, EPP, and one of the DRMS mine permits. Special Use Permits are also in place with San Miguel County,
which mainly address road maintenance and transportation issues with some limitations in effect on when and how many trucks may be used
for ore haulage to the mill. On February 4, 2020, the Colorado DRMS sent a Notice of Hearing to Declare Termination of Mining Operations
to Western for the Sunday Mine Complex. At issue is the application of an unchallenged Colorado Court of Appeals Opinion for a separate
mine, with very different facts that is retroactively modifying DRMS rules and regulations. The Company maintains that it was timely in
meeting existing rules and regulations. 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. The Company anticipates joining with the MLRB in defense of their
July 22, 2020 decision.
Major permits currently in place at the Sunday Complex include:
●
Sunday 112d Mine Permit M-1977-285 (DRMS)
●
St. Jude 110d Mine Permit M-1978-039-HR (DRMS)
●
West Sunday 112d Mine Permit M-1981-021 (DRMS)
●
Carnation 110d Mine Permit M-1977-416 (DRMS)
●
Topaz 112d Mine Permit M-1980-055-HR (DRMS)
●
West Sunday Plan of Operations COC 52049 (BLM)
●
Sunday, St. Jude and Carnation Plan of Operations COC-53227 (BLM)
●
Resolution #1997-18 Mine Permit (San Miguel County)
●
Resolution 2007-34 Topaz and Sunday Expansion (San Miguel County)
●
Resolution 2008-41 Increased Ore Haulage (San Miguel County)
●
Road & Bridge Special Construction Permit (SCP) 06-14 (San Miguel County)
19
2.
San Rafael
The Property
The San Rafael Uranium Project land position is comprised of
a contiguous claim block covered by 136 BM unpatented federal lode mining claims and 10 Hollie unpatented federal lode mining claims.
The San Rafael Project is located in the historic Tidwell District
about 10 miles west of Green River, Utah. Most of the property is north of Interstate Highway 70 at the Hanksville exit.
Energy Fuels became operator of the San Rafael Project when
it acquired Magnum Minerals in June 2009. It consisted of two core uranium deposits, the Deep Gold and the Down Yonder. In January
2011, EFR acquired the 10 Hollie claims from Titan Uranium. These claims covered the eastern portion of the Deep Gold deposit,
greatly increasing resources. WUC acquired the property from Energy Fuels and currently holds the 146 claims in the project area.
The San Rafael Uranium Project is currently being held as a
property that is exploratory in nature with no identified reserves. Exploration and mining plans have not been prepared for the
project. Western Uranium & Vanadium Corp. has not yet undertaken any development work at the property. Power and water
sources have not yet been formally assessed.
Magnum’s acquisition of the claims and some of the data
Magnum purchased encumbers the claims. This includes a 2% Net Smelter Return royalty to Uranium One, successor to Energy Metals
for claims acquired by Magnum as earn-in to a JV, and a 2% net sales price royalty to Kelly Dearth on the BM claims. There is no
royalty on the Hollie claims.
The unpatented claims are located on approximately 2,900 acres
of land administered by the U.S. Bureau of Land Management in sections 13, 14, 23, 24, 25, 26, and 35, T21S, R14E, SLPM, Emery
County, Utah. Holding cost $22,630 due to BLM for claim maintenance fees prior to September 1 each year.
20
Accessibility
The property is located on the eastern side of the San Rafael
Swell in east-central Utah, approximately 140 air miles southeast of Salt Lake City. The little desert community of Green River,
Utah is located about ten miles to the east. In a general sense the San Rafael Uranium Project property position lies within a
wedge shaped area, roughly bound along its northeast edge by US Highway 6-50 and along its southeast edge by Interstate 70.
Concerning additional local access features, U.S. Highway 6-50
crosses just north of the greater San Rafael Uranium Project area in a northwesterly direction and is roughly paralleled by the
regional railroad line. Access to the property is generally good year around, except for periods of heavy snowstorms during December
through February and increased monsoon rains and summer cloudburst storms during August through October. Access for drilling and
other exploration activity is excellent, except during occasional heavy rainy periods which can create heavy flash flooding and
roads mudding-up and becoming impassable.
History
The Deep Gold deposit was originally discovered by Continental
Oil Company (Conoco) and Pioneer Uravan geologists in the late 1960s and 1970s to early 1980s, respectively. Exploration drilling
was conducted just east of the core of the Tidwell Mineral Belt and north-northeast of the Acerson Mineral Belt. The area containing
the deposits was considered to contain highly prospective paleo trunk stream channel trends. Some of the larger historic producing
mines in the area were Atlas Minerals’ Snow, Probe, and Lucky Mines. The deposit in the San Rafael Project is an open concordant,
channel-controlled, sandstone-hosted, trend type, with mineralization hosted in the upper sandstone sequence of the Salt Wash Member
of the Upper Jurassic Morrison Formation.
In addition to Conoco, Pioneer Uravan, and Atlas Minerals, the
US Atomic Energy Commission (AEC) and other companies (Union Carbide, Energy Fuels Nuclear, and others) conducted exploration drilling
and mining in the area. Some of these companies performed historic resource estimates on the Deep Gold deposits, but, they are
not considered compliant with NI 43-101 standards. These resource estimates are of historical importance, were generated by senior
mining companies with significant uranium exploration and production experience and are considered as relevant checks to this updated
Technical Report.
Depth to mineralization at the Deep Gold deposit in Section
23 averages 800 feet, with hole depths averaging approximately 1,000 feet. Magnum purchased and otherwise acquired most of the
available historic exploration data produced by the previous operators. A 100 hole, 100,000 foot drilling program is warranted
to discover and define additional uranium resources. Total cost for this work would be $US 1.3 million to $US 1.5 million, based
on an all-inclusive cost of $US 15/foot.
The Tidwell Mineral Belt and the San Rafael Uranium District
have been the sites of considerable historic exploration drilling and production, with over 4 million pounds of uranium and 5.4
million pounds of vanadium produced. Production from the Snow, immediately up dip of the Deep Gold deposit, which produced for
nine years, starting in March 1973 and ending in January, 1982 consisted of 650,292 pounds of U3O8 contained in 173,330 tons of
material at an average grade of 0.188% U3O8 (Wilbanks, 1982).
O. Jay Gatten, P. Geol., LLC was commissioned
by Western Uranium & Vanadium to prepare an Independent Technical Report compliant with the Canadian National Instrument
43-101 on the San Rafael Uranium Project (including the: Deep Gold Uranium Deposit and the Down Yonder Uranium Deposit), an advanced-stage
uranium property. The report was finalized on November 19, 2014 and filed on sedar.com on November 20, 2015.
The filed Technical Report states that the Deep Gold deposit
of the San Rafael Project comprises a historic indicated uranium resource of 475,000 tons grading at 0.25% U3O8 containing 2,415,300
lbs U3O8 and a historic inferred Mineral Resource of 92,350 tons grading at 0.32% U3O8 containing 587,800 lbs U3O8. This Technical
Report resource is an historic estimate under NI 43-101. The historic mineral resource estimate was calculated by using polygonal
and statistical methods. Both methods have been successfully applied in the evaluation of resources at many prospects and
operating mines within the Salt Wash sandstone uranium deposits.
The San Rafael Uranium Project Technical Report filed by Western
Uranium & Vanadium estimates mineral resources and not reserves. That report does not use categories other than “mineral
resources” and “mineral reserves”, and the San Rafael Uranium Project property was reported as having no reserve
quality mineralization. There is no more recent or available data on the San Rafael Uranium Project resource than that of the Western
Uranium & Vanadium Technical Report from 2014. In order to disclose the historic resource as current, the Company needs
to have completed and filed an NI 43-101 technical report on sedar.com which includes discussion on the reasonable prospect for
economic extraction of the mineral resource. A qualified person (as understood under NI 43-101) has not done sufficient work to
classify the historical estimate as current mineral resources or mineral reserves, and the Company is not treating the historical
estimate as current mineral resources or mineral reserves. In order to upgrade or verify the historical estimate provided by the
Western Uranium & Vanadium Technical Report, the Company would have to engage a qualified person to, among other things,
take account of any exploration or other work on the San Rafael Uranium Project since the date of the historical estimate and otherwise
produce a report under NI 43-101.
21
Project Geology
Geologically, the main hosts for uranium-vanadium
mineralization in the San Rafael Project are the fluvial sandstone beds assigned to the upper part of the Salt Wash Member of the
Jurassic Morrison Formation.
Restoration and Reclamation
All exploration permits have been terminated and all bonds released.
An EA was completed by BLM in 2008 for drilling up to 150 holes. A large area has been surveyed for cultural and paleontological
resources which would expedite future exploration permits. No mine permitting activities have yet occurred.
Permitting Status
All exploration permits have been terminated and all bonds released.
An EA was completed by BLM in 2008 for drilling up to 150 holes. A large area has been surveyed for cultural and paleontological
resources which would expedite future exploration permits. No mine permitting activities have yet occurred.
22
3.
Sage
The Property
On July 1, 2014 PRM concluded a deal with EFR to acquire 44
contiguous unpatented mining claims on the Utah side of the Colorado-Utah state line at the head of Summit Canyon at the south
end of the Uravan Mineral Belt.
The 94 unpatented claims are located on approximately
1,942 acres land administered by the U.S. Bureau of Land Management in sections 34 and 35, T32S, R26E, SLPM, San Juan County, Utah
and sections 25 and 26, T43N, R20W, NMPM, and sections 19, 29, 30, 31, and 32, T43N, R19W, NMPM San Miguel County, Colorado. Holding
cost is $14,370 due to BLM for claim maintenance fees prior to September 1 each year. The property has access to grid
power, however, no source of industrial water has yet been identified. The Sage Mine Project is currently being held as a property
that is exploratory in nature with no identified reserves. Exploration and mining plans have not been prepared for the project.
Western Uranium & Vanadium Corp. has not yet undertaken any development work at the property.
Accessibility
The Sage Plain Project property can be accessed from the north,
south, and east on paved, all-weather county roads. The nearest towns with stores, restaurants, lodging, and small industrial supply
retailers are Monticello, Utah, 26 road miles to the west, and Dove Creek, Colorado, 20 road miles to the southeast. Larger population
centers with more supplies and services are available farther away at Moab, Utah (61 road miles to the north) and Cortez, Colorado
(54 road miles to the southeast).
U.S. Highway 491 connects Monticello, Utah to Dove Creek and
Cortez, Colorado. There are two routes north from this highway to the project. At one mile west of the Colorado/Utah state line
(16 miles east of Monticello or 10 miles west of Dove Creek), San Juan County Road 370 goes north for 10 miles to the Calliham
Mine portal site drive way. The mine portal is one-half mile east of Road 370, on a private road. An alternate route is to turn
north on Colorado Highway 141(2 miles west of Dove Creek) for 9.5 miles to Egnar, Colorado, then turn west on San Miguel County.
Road H1 for 1.2 miles before intersecting San Juan County Road 370. Road 370 would be taken north for 4 miles to the Calliham Mine
portal site driveway. Road H1 from Egnar would also be used if one was traveling to the project on Highway 141 from farther north
in Colorado, such as Naturita, Colorado (a total of 62 miles away).
History
The property includes the historic producing Sage Mine and boarders
the famous Deremo Mine and the Calliham Mine (combined historic production of over 8 million lbs. U3O8 and
70 million lbs. V2O5). The uranium-vanadium deposits occur in the upper and middle sandstones of the Salt Wash Member
of the Morrison Formation.
WUC is in possession of historic mine and drill maps. About
200 historic holes were drilled on the claims at the Sage Mine. A considerable, but unknown amount of drilling occurred historically
on the eastern (Colorado) part of the claims along the benches of Summit and Bishop Canyons. Historic production from several small
mines occurred on the Colorado claims (Red Ant, Black Spider, etc.).
The Sage Mine was developed, operated, and permitted by Atlas
Minerals in the 1970s. It closed in 1982 and was ultimately sold and the permit transferred to Butt Mining Company under a Small
Mine NOI. Jim Butt operated the mine for a short time in the early 1990s when vanadium prices were high; however, the mine has
been idle since that time.
In the fall of 2011, Colorado Plateau Partners drilled seven
holes totaling 4,873 feet at the Sage Mine property to confirm historic map data and explore for a possible east-west channel connecting
the mine to a mineralized body to the west. The drilling was successful in meeting the objectives of confirming the accuracy of
the historic data and verifying a historically defined mineralized body. One hole exploring a possible mineralized trend connecting
the mine to the western mineralized body intercepted 2.0 feet of 0.407% eU3O8. Another hole intercepted mineralization greater
than 1.0 foot of 0.16% eU3O8.
Prior to the Company’s acquisition of the Sage Mine property,
Energy Fuels, Colorado Plateau Partners (a Joint Venture between Energy Fuels and Lynx-Royal) completed a NI 43-101 Technical Report
on the Sage Plain Project (Technical Report on Colorado Plateau Partners LLC (Energy Fuel Resources Corporation/Lynx-Royal
JV) Sage Plain Project, San Juan County, Utah and San Miguel County, Colorado by Douglas C. Peters, Certified Professional Geologist,
Peters Geosciences Golden, Colorado December 16, 2011) (the “Sage Mine Energy Fuels Technical Report”).
The Sage Mine Energy Fuels Technical Report resource is an historic estimate
under NI 43-101.
23
The historic mineral resource estimate was calculated by a modified
polygonal method. The Sage Mine area had drill spacing of 50-150 feet. At locations where drifting or stopping has removed portions
of polygons, appropriate reductions to the resources assigned in those polygons were made. Mining assumptions were used in determining
a cutoff grade for the resource estimates. The minimum mining thickness for this type of deposit is considered to be 2 feet. Uranium
resource grades of 0.00% were used to dilute any intercept less than 1 foot of to meet the 2 feet minimum.
The Sage Mine Energy Fuels Technical Report filed by Colorado
Plateau Partners estimates mineral resources and not reserves. That report does not use categories other than “mineral resources”
and “mineral reserves”, and the Sage Mine property was reported as having no reserve quality mineralization. There
is no more recent or available data on the Sage Mine project resource than that of the Energy Fuels Technical Report from Colorado
Plateau Partners. In order to disclose the historic resource as current, the Company needs to have completed and filed an NI 43-101
technical report to sedar.com. A qualified person (as understood under NI 43-101) has not done sufficient work to classify the
historical estimate as current mineral resources or mineral reserves, and the Company is not treating the historical estimate as
current mineral resources or mineral reserves. In order to upgrade or verify the historical estimate provided by the Sage Mine
Energy Fuels Technical Report, the Company would have to engage a qualified person to, among other things, take account of any
exploration or other work on the Sage Mine since the date of the historical estimate and otherwise produce a report under NI 43-101.
Energy Fuels submitted an Exploration NOI to the BLM in March
2013 for the site thereby establishing a nominal permit for the facility. Permitting for mine expansion was started in 2012, but
was discontinued due to other priorities. This work included installing 3 monitoring wells around a proposed portable water treatment
plant (exploration permit E/037/0188; bond $16,020) and conducting baseline studies (archeology, biology, groundwater). Eight baseline
groundwater sampling events have been completed, which will allow for submittal of a complete groundwater discharge permit application
to DWQ. The Sage Mine Energy Fuels Technical Report resource provides an historic estimate. The Company has a high degree of confidence
in the referenced NI 43-101 Technical Report which references the Company’s Sage Project.
Other than offsetting some of the historic drill holes and use
of gamma logs where available, no verification of the historical data has been conducted. No core is available at the present time
from the earlier exploration or production work.
It was Douglas C. Peter’s (author of the referenced NI
43-101 Technical Report) opinion that the uranium and vanadium data from drilling in 2011 and from historical information on analyses
and down hole probing were adequate for the purposes of that technical report and for basic resource estimation using those data.
Project Geology
The Sage Plain and nearby Slick Rock and Dry Valley/East Canyon
districts uranium vanadium deposits are a similar type to those elsewhere in the Uravan Mineral Belt. The location and shape of
mineralized deposits are largely controlled by the permeability of the host sandstone. Most mineralization is in trends where Top
Rim sandstones are thick, usually 40 feet or greater.
The Sage Plain District appears to be a large channel of Top
Rim sandstone which trends northeast, as one of the major trunk channels that is fanning into distributaries in the southern portion
of the Uravan Mineral Belt. The Calliham/Crain/Skidmore (Calliham Mine) and Sage Mine deposits, as well as nearby Deremo and Wilson/Silverbell
mines appear to be controlled by meandering within this main channel.
The Morrison sediments accumulated as oxidized detritus in the
fluvial environment. During early burial and diagenesis, the through-flowing ground water within the large, saturated pile of Salt
Wash and Brushy Basin material remained oxidized, thereby transporting uranium in solution. When the uranium-rich waters encountered
the zones of trapped reduced waters, the uranium precipitated. Vanadium may have been leached from the detrital iron-titanium mineral
grains and subsequently deposited along with or prior to the uranium.
The thickness, the gray color, and pyrite and carbon contents
of sandstones, along with gray or green mudstone, were recognized by early workers as significant and still serve as exploration
guides. Much of the Top Rim sandstone in the Sage Plain Project area exhibits these favorable features; therefore, portions of
the property with only widely spaced drill holes hold potential. However, without the historic drill data, it cannot be determined
where sedimentary facies are located (e.g., channel sandstones thin and pinch-out, or sandstone grades and interfingers into pink
and red oxidized sandstone and overbank mudstones). Furthermore, locations of interface zones of the oxidized and reduced environments
are hard to predict. Until more historic data are obtained and/or more drilling occurs on the property away from the historic mines,
these outlying areas remain exploration targets.
Restoration and Reclamation
A financial warrant is posted with the Colorado Mined Land Reclamation
Board for the amount of $40,124.
24
Permitting Status
Although the mine is permitted (S/037/0058) and bonded ($40,124) for
reclamation, it is not permitted for mining. Because of its location on BLM managed land, an Environmental Assessment will need to be
prepared for the site by a third-party contractor once a Plan of Operations is submitted for the mine operation. An amendment to the Small
Mine Reclamation NOI will also be needed with Utah Division of Oil Gas and Mining to allow for mine expansion.
Existing permits
include:
Small Mine Reclamation
permit with the Utah Division of Oil Gas and Mining.
Basis of Disclosure
The scientific and technical information provided in this Form
10-K on the Sage Mine, as well all data and exploration information reported in this Form 10-K on the Sage Mine, is based on the
information reported in the Sage Mine Energy Fuels Technical Report.
4.
Dunn
The Property
The 11 unpatented claims are located on approximately 220 acres
of land administered by the BLM in sections 14 and 15, T32S, R25E, SLPM, San Juan County, Utah. Holding costs of the 11 claims
will be $1,705 due to BLM before September 1 each year.
The Dunn Project is currently being held as a property that
is exploratory in nature with no identified reserves. Exploration and mining plans have not been prepared for the project. Western
Uranium & Vanadium Corp. has not yet undertaken any development work at the property. Power and water sources have not
yet been formally assessed.
Accessibility
The property lies in Bear Trap Canyon, a tributary at the head
of East Canyon. This is midway between the EFR Rim Mine and the Calliham/Sage mine area. Access to the Dunn project is from
West Summit Road (San Juan County Road 313), 10.8 miles north of the junction with U.S. Highway 491. West Summit Road is a two-lane
paved road that is well maintained year round. At 10.8 miles, a graveled Class D County Road (unnamed), spurs off of West Summit
Road, passes through the leased lands and terminates at the Dunn Portal at approximately 2.1 miles from the spur. The nearest town
to the Dunn project is Monticello, Utah which is approximately 65 miles away. The closest commercial airport facilities are located
in Cortez, Colorado, approximately 65 miles to the southeast, and Moab, Utah approximately 65 miles to the northwest; both airports
have daily commercial flights to-and-from Denver International Airport.
History
The first discovery of uranium-vanadium mineralization within
close proximity to the Dunn project was by Homestake Mining Company in the late 1960s at what would eventually become the Wilson
Mine 4 miles to the east. Mineralization associated with the Dunn mine was discovered by Gulf Oil Corporation in the late 1960s,
which was subsequently acquired by Homestake, followed by Atlas Minerals in the 1970’s. Between 1975 and 1983 Atlas completed
243 drill holes at the Dunn project with an average total depth of 724 feet. By 1981, Atlas had delineated a resource that could
justify the construction of a 3,825 foot decline. The decline successfully reached the perimeter of delineated mineralization,
but before any production-mining, Atlas ceased operations in 1983 when faced with financial setbacks that required them to divert
funds.
In July, 2013, Energy Fuels Resources acquired the Dunn Mine
property from American Strategic Minerals Corporation and Kyle Kimmerle.
Project Geology
The Dunn project occurs on structurally
unaffected terrain between the gently folded Boulder Knoll anticline to the southwest and the more prominent salt-cored Lisbon
Valley anticline to the northeast. The strata beneath the project are relatively flat, and no major faults or folds are expected
to disrupt bedding or unit contacts.
Uranium-vanadium mineralization at the
Dunn is hosted in the Salt Wash Member of the Jurassic Morrison formation which occurs at approximately 500 to 750 feet below the
surface. The average depth to the mineralized sandstones within the Salt Wash Member is 650 feet from the surface.
The primary uranium mineral is uraninite
with minor amounts of coffinite. The primary vanadium mineral is Montroseite.
Restoration and Reclamation.
No liabilities currently exist.
25
Permitting Status
No permits currently exist.
Basis of Disclosure
The scientific and technical information provided in this Form
10-K on the Dunn Project American Strategic Mineral Corporation is based on information provided in a NI 43-101 Technical Report
prepared by American Strategic Minerals Corporation (the previous owner of the Dunn Project) entitled Technical Report on American
Strategic Minerals Corporation’s Dunn Project, San Juan County, Utah by Dr. David A. Gonzales, PhD, PG, Durango, Colorado
March 23, 2012. Mr. Gonzales is a qualified person for purposes of NI 43-101. However, none of the data, other exploration information
or other results reported in that report are being incorporated into this Form 10-K.
5.
Van #4
The Property
The Van#4 is located in the Uravan Mineral Belt on Monogram
Mesa in Montrose County, Colorado. The property had been held by Denison and its predecessors for many years. The property consists
of 80 unpatented mining claims covering the mine site and long-known deposit to the east, plus two large claim groups to the north,
east, and south with exploration potential.
The 80 unpatented claims are located on approximately 1,900 acres
land administered by the U.S. Bureau of Land Management in sections 27, 28, 29, 33, and 34, T48N, R17W, NMPM, and some in section
3, T47N, R17W, Montrose County, Colorado. The Holding costs of the 80 claims will be $12,400 due to BLM before September
1 each year. There are no royalties encumbering these claims.
The property includes the Van #4 shaft and associated surface
facilities, which need renovation. The mine is connected to the Ura decline on claims in Bull Canyon to the southwest,
not owned by WUC. It has been on standby for many years. Denison completed reclamation of two of the ventilation holes in
2008 and 2010. The property has access to grid power; however, no source of industrial water has been identified yet. The Van 4
mine is currently being held as a property that is exploratory in nature. Exploration and mining plans have not been prepared for
the project. Western Uranium & Vanadium Corp. has not yet undertaken any development work at the property. Power and water
sources have not yet been assessed.
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.
Accessibility
The Van #4 mine is accessible via Montrose
County Roads year-round.
History
The Van#4 was initially permitted in the late 1970s and early
1980s by Union Carbide as part of a number of small mines named the Thunderbolt Group. Energy Fuels Nuclear, Inc. (EFN) acquired
the mine in 1984 and then transferred the mine and permits to International Uranium Corporation (IUC) in 1997. IUC re-permitted
the mine with DRMS (then known as the Division of Minerals and Geology) in 1999 because the previous permit had included other
mines in the area that were not acquired by IUC. Mine Permit M-1997-032 with DRMS is currently in good standing and bonded
for $75,057. Amendment AM-1, which incorporated the approved EPP, was issued on May 30, 2012. The permit has been transferred over
the years from IUC to Denison Mines (USA) Corp. to Energy Fuels Resources (USA) Inc. and now to WUC by way of PRM.
26
Project Geology
The uranium-vanadium deposits occur in the upper and middle
sandstones of the Salt Wash Member of the Morrison Formation. Deposits in this part of the Uravan Mineral Belt have a moderate
V2O5: U3O8 ratio. The Company is in possession of much historic mine and drill data (former Union Carbide/Umetco property), as
well as up-to-date mine maps. Denison drilled most recently (summer 2008) 21 wide-spaced exploration holes in sections 27
and 34. All have been reclaimed and the permit terminated.
Restoration and Reclamation.
There is a reclamation bond held by the
Colorado DRMS for $75,057.
Permitting Status
Permit compliance is currently limited to an annual stormwater inspection; stormwater improvement
work was completed in 2010 and 2012. The air permit with APCD was recently allowed to lapse, as the company does not have any immediate
development or operation plans for the mine. The mine does not have EPA approval for radon emissions; however, this approval may
not be needed to restart mining, as the life-of-mine production will likely be less than 100,000 tons. The DRMS mining permit was
put into Temporary Cessation in February, 2014. Existing major permits at the mine include:
●
BLM Plan of Operations COC-62522 (same as DRMS Permit M-97-032)
●
DRMS 110d (Small Mine, DMO) Mine Permit M-97-032
27
6.
Hansen/Taylor
The Property
Within the Project area, Black Range has mining agreements,
owns fee minerals, holds options to purchase fee mineral rights, holds federal unpatented mining claims and mineral leases with
the State of Colorado, and has in place surface access agreements, including:
- 1 x private Mineral Lease
- 1 x State Mineral Lease (UR3324)
- 1 x option to purchase 100% of the Hansen and Picnic Tree
Deposits
- 108 Federal unpatented mining claims
The Hansen/Taylor Ranch Project is currently being held as a
property that is exploratory in nature with no identified reserves. Neither exploration plans nor a mining plan exist for the project.
Black Range Minerals has not undertaken development work at the property since groundwater well installation in 2013. Power and
water sources have not yet been formally assessed.
Notably a portion of the Hansen/Taylor deposit was in dispute
during 2017. On September 16, 2015, in connection with the Company’s acquisition of Black Range, the Company assumed an option
and exploration agreement (the “Option and Exploration Agreement”) with STB Minerals, LLC, a Colorado limited liability
company (“STB”). The Option and Exploration Agreement gives the Company the right to purchase 51% of the mineral rights
of specific areas of the Hansen and Picnic Tree deposits (for which the Company already holds 49% of the rights). If the Company
were to exercise its option under the Option and Exploration Agreement, it would require the Company to (a) make a cash payment
of $2,500,000 immediately upon exercise; (b) issue common shares to STB amounting to a value of $3,750,000 immediately upon exercise;
and (c) issue common shares to STB amounting to a value of $3,750,000 on the date that is 180 days following exercise. The Option
and Exploration Agreement was scheduled to expire by its terms on July 28, 2017 if not exercised.
The Option and Exploration Agreement provided an extension for
an “event of force majeure”. Under this clause, the Company would receive an extension of the period during which it
could exercise its option if it experiences an unreasonable delay outside its control that prevents it from exercising the option. On
May 10, 2017, the Company provided to STB a notice that it was exercising the force majeure clause due to the delay by government
regulators in licensing the Company’s Kinetic Separation and permitting mining at the Hansen property. STB has contested
the Company’s finding that an event of force majeure has occurred. Ongoing negotiations continued until September 21, 2017
when the Company and STB agreed to settle the matter through the pre-established arbitration mechanism. Prior to the commencement
of arbitration, a settlement was agreed to on February 28, 2018 through the execution of an Amendment of Option and Exploration
Agreement. As consideration, the Company paid STB a $20,000 extension payment and granted STB the right to seek a bona fide written
offer over the remaining term, and agreed to the removal of the force majeure clause from the agreement. The Company received an
extension until July 28, 2019 and a right of first refusal to match any bona fide written offer. Hence the Company already owned
49% of the resource property and retained an option to purchase the 51% of the resource property that the Company did not already
own for the duration of the agreement. Further the Company believes the execution of this agreement was without financial implications,
and as such, the Company has not made any adjustment to these consolidated financials related to this matter.
Prior to July 28, 2019, the Company decided not to exercise
the option to purchase the remaining 51% of the mineral rights of specific areas of the Hansen and Picnic Tree deposits, and thus
the option has expired unexercised.
Accessibility
The Project is located in Fremont County, in South Central Colorado
approximately 30 miles northwest of the city of Canon City. Canon City is the closest population center, and had a population of
16,400 in 2010. The largest metropolitan area in close proximity to the Project is Colorado Springs which is located approximately
46 miles northeast of Canon City and has a population of approximately 416,000. Figure 1 shows the locations of these population
centers with respect to the Project.
For ground travel, Canon City is best accessed from Denver/Colorado
Springs via I-25 south to State Highway 115 which intersects Highway 50 just east of Canon City. For air travel, alternatives include
the Colorado Springs Municipal Airport (COS), which is a 16-gate facility served by 14 airlines and Denver’s International
Airport (DEN), which is 149 miles from Canon City. There is a small airport, Fremont County Airport (CNE), located in Canon City,
which is open to private flights. The property has access to grid power; however, no source of industrial water has been identified
yet.
History
Uranium mineralization was discovered in the Tallahassee Creek
District in 1954 by two groups of prospectors. Between 1954 and 1972, 16 small open pit and underground mines were operated in
the district. Discoveries, and most producing mines and production were in the Tallahassee Creek Conglomerate, with one mine, the
Smaller Mine, producing from the Echo Park Formation. Exploration efforts were minimal until Rampart Exploration Company (Rampart),
under contract to Cyprus, explored the Taylor Ranch area beginning in 1974 and discovered the Hansen Uranium Deposit along with
other uranium deposits in the district. Cyprus took the Hansen and Picnic Tree deposits through a positive final feasibility analysis
in 1980 for an open-pit mining and conventional uranium milling operation, and secured all necessary operating permits in 1981.
The collapse of the uranium market led to Cyprus abandoning the project which lay dormant until Black Range Minerals began activities
in late 2006.
28
Black Range Mineral’s Taylor Ranch Project, CO, consists
of a combination of private, BLM and State Section minerals, and private, BLM and State Section surface rights. Ownership of the
private minerals and surface has mainly been by local ranchers. Western Nuclear held a portion of the property briefly in 1968.
Cyprus gained control of mineral and surface rights during the period 1975-1978.
In 1993, Cyprus sold their Tallahassee Creek holdings to Noah
(Buddy) and Diane Taylor who had managed ranching activities on the property. The Taylors were not able to make the final payment
to Cyprus and sold the southern portion of their holdings which included the Hansen and Picnic Tree deposits to New Mexico and
Arizona Land (now NZ Minerals) in 1996 who, in 1998, sold the property to South T-Bar Ranch, a subsidiary of Colorado developer
Land Properties, while reserving a 49% interest in the minerals.
This part of Cyprus’ prior holdings was subdivided, mainly
into 35-acre parcels. Beginning in December 2006, through various purchases, leases and option agreements, Black Range Minerals
has obtained mineral rights to most of the original Cyprus holdings.
Prior to the Hansen/Taylor Project being acquired by WUC, a mineral resource
for the Hansen/Taylor Ranch Project for Black Range Minerals Limited. Black Range Reported a JORC compliant indicated uranium resources.
This historic resource estimate was originally reported to Black Range Minerals Limited by Tetra Tech in four resource memos (collectively,
the Tetra Tech Reports): 1) High Park Kriging Resources – Taylor Ranch Uranium Project, April 25, 2008; 2) North Hansen, Boyer Kriging
Resources – Taylor Ranch Uranium Project, April 29, 2009; 3) Technical Memorandum – Boyer, Hansen and Picnic Tree Area Kriging
Resources – Taylor Ranch Uranium Project, August 24, 2009; and 4) Technical Memorandum – Boyer, Hansen and Picnic Tree Area
Kriging Resources – Taylor Ranch Uranium Project (Updated 2010), August 12, 2010. These memos were originally prepared by Rex Bryan
of Tetra Tech, a qualified person under NI 43-101. The results reported in the Tetra Tech Reports are historical estimates under NI 43-101.
There is high confidence in the geologic interpretation of the
historic Black Range Minerals resource provided in the Tetra Tech Reports. The deposit is stratified and laterally consistent drill
hole logging and surface mapping supports this conclusion. The data source for geologic interpretation is primarily drill hole
logs and surface mapping. The model currently assumes minimal post mineralization faulting. Deposit domains were confined by corresponding
geologic units. Continuity of geology is on a regional sedimentary scale and is regular. Grade continuity is subject to deposition
of carbonaceous material and oxidation reduction interfaces of palaeo-groundwater carrying mobilized uranium. Commonly accepted
multi-pass kriging methods were used to estimate the mineral resources. Uranium domains were modeled using wireframe solids, resources
were quantified outside the solids with drastically reduced search ranges. Estimates were checked and compared to historic estimates.
Blocks were sized as a tradeoff between mineralized shapes and general mining selectivity. The block heights are four to six times
the half foot sample collection but block lengths and widths are several times smaller than the drill spacing in order to adequately
fit the mineralized shapes. It is assumed that due to the soft sedimentary nature of the mineral zone, good selectivity can be
achieved.
The historic Black Range Minerals resource reported in the Tetra
Tech Reports uses JORC indicated and inferred resource categories and does not contain reserves. That report does not use categories
other than “mineral resources” and “mineral reserves”. There are no more recent estimates or data available
to WUC or Black Range Minerals. In order to verify this estimate, the Company would need to prepare a NI 43-101 Technical Report
to disclose the mineral resources as current. This would involve, among other things verifying the results under NI 43-101 standards
and potentially conducted new or additional analyses under NI 43-101 standards, as well as taking into account any exploration
or other work conducted on this property since the latest of the Tetra Tech Reports. A qualified person (as defined under NI 43-101)
has not completed sufficient work to classify this historical estimate as current under that rule, and the Company is not treating
this historical estimate as current.
Project Geology
The deposits that make up the Project are tabular sandstone
deposits associated with redox interfaces. The mineralisation is hosted in Tertiary sandstones and/or clay bearing conglomerates
within an extinct braided stream, fluvial system or palaeo channel. Mineralisation occurred post sediment deposition when oxygenated
uraniferous groundwater moving through the host rocks came into contact with redox interfaces, the resultant chemical change caused
the precipitation of uranium oxides. The most common cause of redox interfaces is the presence of carbonaceous material that was
deposited simultaneously with the host sediments. In parts of the Project the palaeochannel has been covered by Tertiary volcanic
rocks and throughout the Project basement consists of Pre-Cambrian plutonics and metamorphic rocks. The volcanic and Pre-Cambrian
rocks are believed to be the source of the uranium.
29
Restoration and Reclamation
BRM has a bond of $154,927 with the DRMS covering exploration
activities for the project.
Permitting Status
The project currently has an exploration permit through the
Colorado Division of Reclamation, Mining and Safety as well as a Conditional Use Permit with the Fremont County Planning and Zoning
Department.
Basis of Disclosure
The scientific and technical information provided in this Form
10-K on the Hansen/Taylor Ranch Project, as well all data and exploration information reported in this Form 10-K on the Hansen/Taylor
Ranch Project, is based on the information reported in the Tetra Tech Reports.
30
31
7.
Bullen Property (Weld County)
The Property
The Bullen Property is a private land parcel
located in Weld County Colorado and is inclusive of 139 surface acres and 160 mineral acres. The property location is Township
9 North, Range 60 West, 6 th P.M., Section 34:NW/4.
Accessibility
The Bullen Property is accessible via Weld
County roads year-round.
History
The Bullen Property is an oil and gas property
located in Weld County Colorado. The Company acquired this non-core property in 2015 in the Black Range Minerals Limited acquisition.
Black Range purchased the property in 2008 for its Keota Uranium Project. This project ran from 2008 to 2013, and at its peak there
were five strategic interests which comprised approximately 3,300 acres in the Keota Uranium District. After the project ceased,
the Bullen Property was the only acreage retained in Weld County by virtue of its outright ownership.
In 2017, the Company signed a three year
oil and gas lease which in 2020 was extended for an additional three year term or the end of continuous operations. The consideration
was in the form of upfront bonus payments and backend production royalty payments. Additional right-of-way easement agreements
were signed which allowed for the development of a pipeline. The lease agreement allows the Company to retain property rights to
vanadium, uranium, and other mineral resources.
In early 2020 Bison Oil & Gas
traded this lease to Mallard Exploration (“Mallard”), Mallard subsequently filed an application with the Colorado Oil &
Gas Conservation Commission (COGCC) to update the permitting to create a new pooled unit.
In late 2020 Mallard began development of the pooled unit. By March
31, 2021, the drilling portion of the project had been completed for the eight horizontal wells named Blue Teal Fed. Seven wells were
drilled to a 2.5 miles lateral length and one well was drilled to a 3.0 mile lateral length. These DJ-Basin wells target the Niobrara
formation. During May 2021, Mallard will commence the well completion stage, fracking, and flow back. Despite some weather delays over
the winter, the Operations Plan remains close to schedule and production is projected to commence during the third quarter.
Project Geology
The Bullen Property is located within the
Denver-Julesburg Basin (“D-J Basin”) which is inclusive of multiple oil and gas formations.
Permitting Status
Mallard’s application with the Colorado
Oil & Gas Conservation Commission (COGCC) created a new order to establish a drilling and spacing unit and set the maximum
number of horizontal wells that may be drilled. The field rules were approved on August 24, 2020 (COGCC Order No. 535-1325). This
order pooled five adjoining parcels into a 3,200 acre pooled unit (“Unit”) and set the maximum number of wells at 24.
A total of 16 wells have been permitted in the Unit.
OTHER
Ferris Haggerty
The Property
A reclamation liability remains at this
Wyoming copper project. No leases or land use remain. The Ferris Haggarty project is a reclamation-only project.
Accessibility
The reclamation project is accessible 4 to 6 months out of the
year due to snow and closed access. Take Wyoming Highway west from Encampment, Wyoming for approximately 11 miles. Once across
the divide, to the northeast there is a pullout for Medicine Bow National Forest recreation. Follow 4 wheel drive route 412 (Continental
Divide Trail) for approximately 5 miles to the Haggerty creek watershed. Turn southwest onto a steep 4 wheel drive rout and travel
for approximately 1.5 miles until you are at the property.
32
History
The Ferris-Haggerty Mine Site was one of the richest
components of the Grand Encampment Mining District in Carbon County, Wyoming. The site was first exploited by Ed
Haggerty, a prospector from Whitehaven, England, in 1897, when he established the Rudefeha Mine on a rich deposit of copper
ore. Haggerty was backed by George Ferris and other investors, of whom all but Ferris dropped out. The partners sold an interest
to Willis George Emerson, who raised investment funding for improvements to the mine. These facilities included a 16-mile (26 km)
aerial tramway from Grand Encampment over the Continental Divide to the smelter in Encampment and a 4-mile (6.4 km)
pipeline to the mine. The mine’s assets were eventually acquired by the North American Copper Company for $1 million. By 1904 the
mine had produced $1.4 million in copper ore, and was sold to the Penn-Wyoming Copper Company. However, even with copper prices
peaking in 1907, the company had difficulty making a profit from the remove mine site. The company was over-capitalized and under-insured,
and was suffered devastating fires at the mine site in March 1906 and May 1907 which halted production. Business disputes and a
fall in copper prices prevented re-opening of the mine even after it was rebuilt. Machinery was salvaged after a foreclosure in
1913. A total of $2 million in copper ore was extracted from the mine during its life.
Project Geology
The Deposit is a tabular injection of magmatic metal differentiation
product at the margins of an ultramafic intrusive of early Archean age (2.2 billion years ago). This intrusive was injected into
pre-existing high siliceous sandstones and shales of massive thickness (+2,000 ft). Mineralization at the Ferris-Haggarty mine
consists of disseminated pyrite and chalcopyrite grains that occur along bedding planes of the host quartzite. However, the massive
ore body mined at the Ferris-Haggarty was described by Spencer (1904) to lie along quartzite-Schist contacts and to cross cut foliation.
Based on the historic description, the ore may have been remobilized from the host quartzite during regional metamorphism and emplaced
along the quartzite-schist contact by way of permeable fractures. The impermeable hanging wall schist may have formed a natural
barrier to the ore solutions and produced an unusually rich ore body.
Restoration and Reclamation
Grass must grow on the drill pad disturbance
areas from drilling which took place in 2007. These drill pads are located at 10,000 feet above sea level on the north face of
a mountain on the Continental Divide.
A $10,000 reclamation bond remains with the Wyoming DEQ. Upon
completing reclamation, the Company will receive the bond money back.
INFRASTRUCTURE
The Company’s carrying value of property,
plant and equipment is as follows:
IP – Kinetic Separation - $9,488,051 The Company holds
a license to use Kinetic Separation, a proven technology that we anticipate will improve the efficiency of the sandstone hosted
uranium mining process, although there are some uncertainties about whether the anticipated benefits will be realized. See Item
1, “Business – The Kinetic Separation Process.” Kinetic Separation is a low cost, purely physical method of uranium
and vanadium ore extraction. Kinetic Separation has been initially tested in order to understand the hydro and mechanical separation
processes. The Company used a prototype Kinetic Separation test system to test several different samples of uranium ore from the
Sunday Mine Complex and the Hansen/Taylor Ranch properties. In all cases, uranium ore that was entered into the Kinetic Separation
pilot test system appeared to concentrate most of the uranium into the post kinetically separated material consisting of a fraction
of the original mass, leaving most of the post kinetically separated materials which did not contain any uranium. The results of
these tests have not yet been validated by a Competent Person.
During 2016, the Company submitted
documentation to the Colorado Department of Public Health and Environment (“CDPHE”) for a determination ruling regarding the
type of license which may be required for the application of Kinetic Separation at the Sunday Mine Complex within the state of Colorado.
During May and June of 2016, CDPHE held four public meetings in several cities in Colorado as part of the process. On July 22, 2016 CDPHE
closed the comment period. In connection with this matter, the CDPHE consulted with the United States Nuclear Regulatory Commission (“NRC”).
In response, the CDPHE received an advisory opinion dated October 16, 2016, which did not contain support for the NRC’s opinion
and with which the Company’s regulatory counsel does not agree. NRC’s advisory opinion recommended that Kinetic Separation
should be regulated as a milling operation but did recognize that there may be exemptions to certain milling regulatory requirements because
of the benign nature of the non-uranium bearing sands produced after Kinetic Separation is completed on uranium-bearing ores. On December
1, 2016, the CDPHE issued a determination that the proposed Kinetic Separation operations at the Sunday Mine must be regulated by the
CDPHE through a milling license. The 2018 increase in the blended uranium/vanadium price has brought the Company closer to production.
Beginning in 2017, the Company’s regulatory counsel has prepared significant documentation in preparation for a prospective submission.
On September 13, 2019, the Company’s regulatory counsel submitted a white paper to the NRC entitled Recommendations on the Proper
Legal and Policy Interpretation for Using Kinetic Separation Processes at Uranium Mine Sites. On July 24, 2020, the NRC staff responded
with a letter in support of the original conclusion; Western’s regulatory counsel is evaluating alternatives.
Mineral Properties $11,735,522 – The Company holds mineral
properties as outlined below.
33
Pinon Ridge Properties
On August 18, 2014, the Company purchased mining assets from
Energy Fuels Holding Corp. in an arm’s length transaction. The mining assets include both owned and leased land in the states of
Utah and Colorado. All of the mining assets represent properties which have previously been mined to different degrees for uranium.
As some of the properties have not formally established proven or probable reserves, there may be greater inherent uncertainty
as to whether or not any mineralized material can be economically extracted as originally planned and anticipated.
The Company’s mining properties acquired
on August 18, 2014 which the Company still retains as of December 31, 2020, include: San Rafael Uranium Project located in Emery
County, Utah; The Sunday Mine Complex located in western San Miguel County, Colorado; The Van 4 Mine located in western Montrose
County, Colorado; The Sage Mine project located in San Juan County, Utah; and the Dunn project located in San Juan and San Miguel
counties, Colorado.
Black Range Properties
On September 16, 2015, in connection with the Black Range Transaction,
the Company acquired additional mineral properties. The mining assets acquired through Black Range include leased land in the states
of Colorado, Wyoming and Alaska. None of these mining assets were operational at the date of acquisition. As these properties have
not formally established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized
material can be economically extracted as originally planned and anticipated.
The Company’s mining properties acquired on September 16, 2015 which
the Company still retains as of December 31, 2020, include Hansen, North Hansen, Hansen Picnic Tree, Taylor Ranch, located in Fremont
County, Colorado. The Company also acquired Keota located in Weld County, Wyoming.
In connection with the Black Range Transaction, Western assumed
a mortgage secured by land, building and improvements at 1450 North 7 Mile Road, Casper, Wyoming, with interest payable at 8.00%
and payable in monthly payments of $11,085 with the final balance of $1,044,015 due as a balloon payment on January 16, 2016. The
Company did not pay the mortgage on its due date. On May 26, 2016, the Company executed agreements with the mortgage holder whereby
in an equal exchange the mortgage was exchanged for the land, building and improvements on which it was secured, pursuant to which
no further financial consideration is required.
During the second quarter of 2016, the Company initiated actions
to cancel its coal mining leases in Alaska. In connection therewith, the Company notified the state of Alaska of its intent to
forfeit the posted bond in satisfaction of the reclamation liabilities at the site. In response to the Company’s notification,
the Company received notification that the state of Alaska was initiating forfeiture of the Company’s performance bond for
reclamation. However, the notice indicated an additional surety bond of $150,000 in excess of the $210,500 cash bond, which had
been posted by the Company upon purchase of the property. The Company and its advisors do not believe that it is obligated for
this additional amount of claimed reclamation obligation. The Company is working with its legal counsel and the State of Alaska
to resolve this matter. The Company has not recorded an additional $150,000 obligation as the Company does not expect, based on
the advice of legal counsel, to be obligated to an amount greater than that presently reflected in the reclamation liability. During
the year ended December 31, 2016, the Company adjusted the fair value of its reclamation obligation and for the Alaska mine, accreted
$183,510 to bring its reclamation liability to face value. The portion of the reclamation liability related to the Alaska mine,
and its related restricted cash are included in current liabilities, and current assets, respectively, at a value of $215,976 and
$215,976. On January 20, 2017, the State of Alaska notified the Company that its reclamation bond had been forfeited to be used
to satisfy the reclamation obligation. However, no amount had yet been determined in respect to the final cost of the reclamation
obligation.
As the properties are not in production, they are not covered
by various types of insurance including property and casualty, liability and umbrella coverage. We have not experienced any material
uninsured or under insured losses related to our properties in the past and believe our approach sufficient given the inactivity.
On September 16, 2015, in connection with the Company’s
acquisition of Black Range, the Company assumed an option and exploration agreement (the “Option and Exploration Agreement”)
with STB Minerals, LLC, a Colorado limited liability company (“STB”). The Option and Exploration Agreement gives the
Company the right to purchase 51% of the mineral rights of specific areas of the Hansen and Picnic Tree deposits (for which the
Company already holds 49% of the rights). If the Company were to exercise its option under the Option and Exploration Agreement,
it would require the Company to (a) make a cash payment of $2,500,000 immediately upon exercise; (b) issue common shares to STB
amounting to a value of $3,750,000 immediately upon exercise; and (c) issue common shares to STB amounting to a value of $3,750,000
on the date that is 180 days following exercise. The Option and Exploration Agreement was scheduled to expire by its terms on July
28, 2017 if not exercised.
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The Option and Exploration Agreement provided an extension for
an “event of force majeure”. Under this clause, the Company would receive an extension of the period during which
it could exercise its option if it experiences an unreasonable delay outside its control that prevents it from exercising the option. On
May 10, 2017, the Company provided to STB a notice that it was exercising the force majeure clause due to the delay by government
regulators in licensing the Company’s Kinetic Separation and permitting mining at the Hansen property. STB has contested
the Company’s finding that an event of force majeure has occurred. Ongoing negotiations continued until September 21, 2017
when the Company and STB agreed to settle the matter through the pre-established arbitration mechanism. Prior to the commencement
of arbitration, a settlement was agreed to on February 28, 2018 through the execution of an Amendment of Option and Exploration
Agreement. As consideration, the Company paid STB a $20,000 extension payment and granted STB the right to seek a bona fide written
offer over the remaining term, and agreed to the removal of the force majeure clause from the agreement. The Company received an
extension until July 28, 2019 and a right of first refusal to match any bona fide written offer. Hence the Company already owned
49% of the resource property and retained an option to purchase the 51% of the resource property that the Company did not already
own for the duration of the agreement. Further the Company believes the execution of this agreement was without financial implications,
and as such, the Company has not made any adjustment to these consolidated financials related to this matter.
Prior to July 28, 2019, the Company decided not to exercise
the option to purchase the remaining 51% of the mineral rights of specific areas of the Hansen and Picnic Tree deposits, and thus
the option has expired unexercised.
Disposal of Mining Properties
In July and October 2016, the Company elected not to renew leases
relating to four projects that were obtained through either the August 2014 acquisition from Energy Fuels Holding Corp. or the
acquisition of Black Range Minerals. The decision to not renew the four leases was based upon a number of factors, the most significant
of which were the location of the projects, the development stage of each product, and the amount of uranium and vanadium resources
within each project. The forfeiture of these leases has no material adverse impact on the fair value of the Company’s mining
assets.
On January 1, 2018, the Company’s Taylor Ranch Lease reached
its expiration date and the Company elected not to negotiate a renewal.
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.