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.
The diagram below illustrates the location of
the Company’s properties:
1. Sunday Mine Complex
2. San Rafael
3. Sage
4. Dunn
5. Van 4
6. Hansen/Taylor Ranch
7. Bullen Property (Weld County)
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Overview
Western Uranium & Vanadium Corp is engaged
in the business of exploring, developing, mining and production from its uranium and vanadium resource properties.
On September 16, 2015, in connection with the
Black Range Transaction, the Company acquired additional mineral properties. The mining assets acquired through Black Range included
assets in the states of Colorado, Wyoming, and Alaska. None of these mining assets are operational at this time. As these properties
have not formally established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized
material can be economically extracted as originally planned and anticipated.
The Company’s mining properties acquired
on August 18, 2014 that the Company retains as of December 31, 2021, 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
● 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, 2021, include:
● Hansen,
North Hansen, High Park, and Hansen Picnic Tree, located in Fremont and Teller Counties,
Colorado
● The
Keota Uranium project acreage located in Weld County, Colorado
● Ferris
Haggerty located in Carbon County, Wyoming
The Company has a 100% interest in all of these
properties except for the Hansen/Taylor Ranch, of which the company owns 49%.
Although we have established the existence of
mineralized materials on our uranium properties, we have not established any measured, indicated or inferred mineral resources or any
proven or probable reserves through the completion of a feasibility study for any of our uranium properties and we have no current plans
to seek to do so, as it would not serve a business purpose at the present time.
The near term plan for the Company’s resources
is to initially mine at the Sunday Complex. The Sunday Mine Complex is an advanced stage property with a significant drilling and production
history. Mining and drilling occurred contemporaneously from the 1950’s through the mid 1980’s. From the 1980’s to
the present, mining and drilling occurred only sporadically, typically when uranium or vanadium prices were high. The last previous mining
interval was from 2006 to 2009. Based on the available records, only in 2009 did any surface drilling take place since mid-1980. Past
operators have generated abundant geologic and mining data, and there are open faces underground that show mineralized zones. Near term
exploration is not needed because the underground infrastructure has been already developed.
Mining Properties
Set forth below are details regarding our mining
properties operated by us, which have been prepared in accordance with the requirements of S-K 1300.
1.
Sunday Mines Complex
The Property
The Sunday Mine Complex
is located in western San Miguel County and is part of the Uravan Mineral Belt. The property is situated 25 miles north of Dove Creek,
Colorado, on the north flank of Disappointment Valley and portions of Big Gypsum Valley. Energy Fuels Resources (USA) Inc. (“EFR”)
acquired the property in June 2012 from Denison Mines Corp. The complex consists of five individual mines with mine workings located
along a two mile stretch of the southern side of Big Gypsum Valley, with underground workings extending generally south, with associated
vents and surface facilities. The mines are, from east to west: Sunday, Carnation, Saint Jude, West Sunday, and Topaz. The
mines were previously actively mined from 2007 to 2009, by a prior owner. In 2017, the mines were re-opening for a project involving
exploration, development, and mining.
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The property consists
of 221 unpatented claims on public land managed by the U.S. Bureau of Land Management (“BLM”) Tres Rios
Field Office, covering approximately 3,800 acres. The area covers parts of sections 10, 13, 14, 15, 23, 24, and 26 T44N
R18W, and sections 18, 19, 20, and 30 T44N R17W. Total annual BLM claim maintenance fees are approximately $34,255 due
September 1st each year. The property has access to grid power and has a natural underground source of water due to an aquifer.
As a mine that has produced in the recent past, the Sunday Mine Complex has a robust infrastructure. The roads are all-weather, electric
power is grid-tied, surface facility structures that meet Colorado State standards exist, and water is present. During 2019, a mine re-opening
project was implemented at the Sunday Mine Complex to identify high-grade vanadium ore, followed by bulk sampling and development drilling.
Active mining was conducted and the extracted ore was stock piled underground in the mine. Each of the five associated mining permits
are in Temporary Cessation status.
GMG, Sunshine, and Patsun claims
(totaling twenty claims in the northeast portion of the property) carry a 12.5% royalty on all ore produced.
Accessibility
The property is best
accessed from Colorado. Access from Colorado is via State Highway 141 east out of Naturita, CO for about 3.7 mi (6 km) until the 141/145
Highway junction, then about 22.4 mi (36 km) south on Hwy 141, then about 6.2 mi (10 km) northwest on County Road 20R (Gypsum Valley
Road). The State Highway 141 is a paved all-weather road and the County Road 20R is a gravel road passable in all but the worst weather.
History
The Sunday Mine Complex
consists of six different mines. These are the Topaz, West Sunday, Sunday, St. Jude, Carnation, and the GMG. The mines have had a number
of owners and operators. Maps and documents made available to the author show that the following companies have been involved in the
all or parts of the property prior to WUC acquisition of the SMC in April 2014: Matterhorn Mining (1950’s-1960’s, Climax
Uranium 1960’s, Union Carbide Corporation (UCC) 1970’s-1980’s, Atlas Minerals (1980’s), Energy Fuels Nuclear
(early 1990’s), International Uranium Corp. (1990’s-2000’s), Denison Mines (USA) (2000’s), and Energy Fuels (2010’s).
The documents are incomplete as so this list may be as well. Since UCC days, the ownership has been clear. In 1983 Union Carbide transferred
its mineral interests to UMETCO, a wholly-owned subsidiary. For the sake of consistency, the name Union Carbide will be used even if
technically the ownership was UMETCO at the time.
Records made available
by the Company and a search of public documents on-line indicates exploration drilling starting on the property in the early 1950’s.
Two Defense Minerals Exploration Administration (DMEA) reports, one on the Sunday area and the other on the Topaz area, indicated some
drilling and minor surface extraction had occurred by the mid 1950’s (DMEA, 1953 & 1956). Additionally, historic maps of the
area show the Sunday mines in operation in the 1950’s (Denison Mines, 2008).
The records & anecdotal
evidence indicate that from the mid-1960’s until the early 1980’s, the SMC produced material from relatively steady ongoing
mining operations. These ceased in 1984 when Union Carbide closed their Uravan mill. Since then, the property has been idle, with the
exception of brief periods in the late 1980’s when UCC mined for a short time during a spike in vanadium prices, in the mid-1990’s
with International Uranium Corporation and another one in 2006-2009 when Denison Mines extracted ore from the mine. During all three
periods, the ore was processed at the White Mesa Mill located just south of Blanding, UT.
Exploration and development
drilling on the property was contemporaneous with the mining. The available database records show that at least 1,419 holes have been
drilled on the property. This is an incomplete list, as an examination of the available maps and cross-sections show a number of holes
that are not in the database. A best estimate for total distance drilled is about 850,100 ft (259,175 m). Anecdotal evidence and some
maps also give evidence that underground long holes (test holes drilled from the mine workings anywhere from 50 ft (15 m) to 300 ft (91
m) long) were used extensively throughout the mined areas.
The 2-D digitized mine
workings, done by Denison Mines show extensive stopping and drifting within parts of the SMC. Generational mine maps indicate that more
mine workings exist than are shown in the digital database. A very conservative rough estimate of the linear mine workings based on the
digital database is in excess of 50,000 ft (15,244 m) with many stopes. Figure 6.2.1 shows the known drill hole and mine working locations.
Based on the records
and on field inspection, it is evident that the Property has a significant history of drill exploration and mine development.
Anthony R. Adkins, P.
Geol., LLC was commissioned by the Company to prepare a technical report compliant with NI 43-101 on the Sunday Mine Complex Uranium
(SMC) Project (the “Sunday Mine Report”). The Sunday Mine Report was finalized on July 7, 2015 and filed on sedar.com on
July 16, 2015.
The Sunday Mine Report is an historic estimate
of measured and indicated resources (not reserves) under NI 43-101. However, the Company is not treating the historical estimate as current
mineral resources, and S-K 1300 does not permit such historic estimates to be disclosed in Form 10-K annual reports.
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There is no more recent data available on the
Sunday Mine Complex project resource than that of the Sunday Mine Report. In order to disclose a resource estimate as current, the Company
would need to engage a qualified person (as defined under 43-101 and S-K 1300) 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 produce a technical report compliant with NI 43-101
and a feasibility study compliant with S-K 1300. The Company currently does not intend to commission such a technical report or feasibility
study.
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.
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 WQCD 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 10, 2020, the MLRB issued a board order
which finalized the findings of the October 21, 2020 permit hearing. On November 6, 2020, the MLRB signed an order placing the five
Sunday Mine Complex mine permits into Temporary Cessation. On November 12, 2020, a coalition of environmental groups (the
“Plaintiffs”) filed a complaint against the MLRB seeking a partial appeal of the July 22, 2020 decision by requesting
termination of the Topaz Mine permit. On December 15, 2020, the same coalition of environmental groups amended their complaint
against the MLRB seeking a partial appeal of the October 21, 2020 decision requesting termination of the Topaz Mine permit. The
Company has joined with the MLRB in defense of their July 22, 2020 and October 21, 2020 decisions. On May 5, 2021, the Plaintiff in
the Topaz Appeal filed an opening brief with the Denver District Court seeking to overturn the July 22, 2020 and October 21, 2020
MLRB permit hearing decisions on the Topaz Mine permit. The MLRB and the Company were to respond with an answer brief within 35 days
on or before June 9, 2021, but instead sought a settlement. The judicial review process was delayed as extensions were put in place
until August 20, 2021. A settlement was not reached and the MLRB and the Company submitted answer briefs on August 20, 2021. The
Plaintiff submitted a reply brief on September 10, 2021. On March 1, 2022, the Denver District Court reversed the MLRB’s
orders regarding the Topaz Mine and remanded the case back to MLRB for further proceedings consistent with its order. The decision
by the District Court has an appeal window of 49 days. The Company is also working toward the completion of an updated Topaz mine
Plan of Operations which is a separate federal requirement of the BLM for the conduct of mining activities on federal land.
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)
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●
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)
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.
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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. The Company 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.
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.
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 U 3 O 8 contained in 173,330
tons of material at an average grade of 0.188% U 3 O 8 (Wilbanks, 1982).
O. Jay Gatten, P. Geol.,
LLC was commissioned by the Company to prepare an independent technical report compliant with NI 43-101 on the San Rafael Uranium Project
(including the: Deep Gold Uranium Deposit and the Down Yonder Uranium Deposit) (the “San Rafael Report”). The San Rafael
Report was finalized on November 19, 2014 and filed on sedar.com on November 20, 2015.
The San Rafael Report is an historic estimate
of indicated and inferred uranium resources (not measured resources or reserves) under NI 43-101. However, the Company is not treating
the historical estimate as current mineral resources, and S-K 1300 does not permit such historic estimates to be disclosed in Form 10-K
annual reports.
There is no more recent data available on the
San Rafael Uranium Project property than that of the San Rafael Report. In order to disclose a resource estimate as current, the Company
would need to engage a qualified person (as defined under 43-101 and S-K 1300) to produce a technical report compliant with NI 43-101
and a feasibility study compliant with S-K 1300. The Company currently does not intend to commission such a technical report or feasibility
study.
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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.
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.
23
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. U 3 O 8 and
70 million lbs. V 2 O 5 ). 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% eU 3 O 8 . Another hole intercepted mineralization
greater than 1.0 foot of 0.16% eU 3 O 8 .
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 Report”).
The Sage Mine Energy Fuels Report resource is
an historic estimate of mineral resources (not reserves) under NI 43-101. The Company is not treating the historical estimate as current
mineral resources, and S-K 1300 does not permit such historic estimates to be disclosed in Form 10-K annual reports.
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.
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.
There is no more recent data available on the
Sage Mine project resource than that of the Sage Mine Energy Fuels Report. In order to disclose a resource estimate as current, the Company
would need to engage a qualified person (as defined under 43-101 and S-K 1300) to produce a technical report compliant with NI 43-101
and a feasibility study compliant with S-K 1300. The Company currently does not intend to commission such a technical report or feasibility
study.
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.
24
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.
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 Impact
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 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.
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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.
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.
26
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 with the state of Colorado. Our mining operations team has made significant progress
on the reclamation as all surface structures have been disassembled and removed with the exception of the head frame.
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.
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
V 2 O 5 : U 3 O 8 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.
27
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
6. Hansen/Taylor Ranch
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
28
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.
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.
29
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. However, the Company is not treating the historical estimate as current
mineral resources, and S-K 1300 does not permit such historic estimates to be disclosed in Form 10-K annual reports.
The historic Black Range Minerals resource reported
in the Tetra Tech Reports uses JORC indicated and inferred resource categories and does not contain reserves. There is no more recent
data available on the Hansen/Taylor Project resource than that of the Tetra Tech Reports. In order to disclose a resource estimate as
current, the Company would need to engage a qualified person (as defined under 43-101 and S-K 1300) to produce a technical report compliant
with NI 43-101 and a feasibility study compliant with S-K 1300. The Company currently does not intend to commission such a technical
report or feasibility study.
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 palaeochannel. 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.
Restoration and Reclamation
During the fourth quarter of 2021, the Company
received notice from the State of Colorado that its surety release request on the Hansen Picnic Tree property had been approved, and
as such, this property is no longer subject to reclamation treatment. As the property wasn’t a current development priority, Western
completed reclamation on the property. The Company recorded a discontinuation of the Hansen Picnic Tree property’s present value
of $44,793 during the fourth quarter of 2021. On December 29, 2021, the Company moved the $154,936 restricted cash deposit into its cash
after receiving payment from the state of Colorado.
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
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.
31
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 2021, the operator completed all well development stages and each of the eight (8) Blue Teal Fed
wells commenced oil and gas production by mid-August 2021. The first royalty payment was made in January 2022 and monthly royalty payments
have been received subsequently. These wells continue to rank among the top Colorado producing wells. Due to the success of the first
8 wells, the operator has decided to develop a second set of 8 wells within Western’s royalty area during 2022.
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.
32
OTHER
Ferris Haggerty
The Property
No leases or land use remain.
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.
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.
During the first quarter of 2021, the Company received notice that
its Ferris Haggerty property was no longer considered to be subject to reclamation treatment. On April 29, 2021, the Company moved the
Ferris Haggerty $10,000 restricted cash deposit into its cash after receiving payment from the state of Wyoming.
INFRASTRUCTURE
The Company’s carrying value of property,
plant and equipment is as follows:
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 qualified person.
33
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 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. 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 whitepaper 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 has proposed alternatives. However, management has decided not to proceed at this time,
given its present opportunity set.
The Company holds mineral properties as outlined below.
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 the 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, High Park, 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.
34
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.