Item 3. Legal Proceedings
ITEM
3. LEGAL PROCEEDINGS
Other than described below, management is not
aware of any material legal proceedings that are pending or that have been threatened against us or our subsidiaries or any of our respective
properties, and none of our directors, officers, affiliates or record or beneficial owners of more than 5% of our common shares, or any
associate of any such director, officer, affiliate or shareholder, is (i) a party adverse to us or any of our subsidiaries in any legal
proceeding or (ii) has an adverse interest to us or any of our subsidiaries in any legal proceeding.
The Company is subject to periodic inspection
by certain regulatory agencies for the purpose of determining compliance by the Company with the conditions of its licenses. In the ordinary
course of business, minor violations may occur; however, these are not expected to result in material expenditures or have any other
material adverse effect on the Company.
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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.
On February 4, 2020, the Colorado DRMS
sent a Notice of Hearing to Declare Termination of Mining Operations related to the status of the mining permits issued by the state of
Colorado for the Sunday Mine Complex. At issue is the application of an unchallenged Colorado Court of Appeals Opinion for a separate
mine (Van 4) with very different facts that are retroactively modifying DRMS rules and regulations. The Company maintains that it was
timely in meeting existing rules and regulations. The hearing wa s scheduled to be held during several
monthly MLRB Board meetings, but this matter has been delayed several times. The permit hearing was held during MLRB Board monthly meeting
on July 22, 2020. At issue was the status of the five existing permits which comprise the Sunday Mine Complex. Due to COVID restrictions,
the hearing took place utilizing a virtual-only format. The Company prevailed in a 3 to 1 decision which acknowledged that the work completed
at the Sunday Mines under DRMS oversight was timely and sufficient for Western to maintain these permits. In a subsequent July 30, 2020
letter, the DRMS notified the Company that the status of the five permits (Sunday, West Sunday, St. Jude, Carnation, and Topaz) had been
changed to Active status effective June 10, 2019, the original date on which the change of the status was approved. On August 23, 2020,
the Company initiated a request for temporary cessation status for the Sunday Mine Complex as the mines had not been restarted within
a 180-day window due to the direct and indirect impacts of the COVID-19 pandemic. Accordingly, a permit hearing was scheduled for October
21, 2020 to determine temporary cessation status. In a unanimous vote, the MLRB approved temporary cessation status for each of the five
Sunday Mine Complex permits (Sunday, West Sunday, St. Jude, Carnation, and Topaz). On October 9, 2020, the MLRB issued a board order which
finalized the findings of the July 22, 2020 permit hearing. On November 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 Company and the MRLB have until April 19,
2022 to appeal the Denver District Court’s ruling. 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.
ITEM
4. MINE SAFETY DISCLOSURES
For Western, safety is a core value, and we strive
for superior performance. Our health and safety management system, which includes detailed standards and procedures for safe production,
addresses topics such as employee training, risk management, workplace inspection, emergency response, accident investigation, and program
auditing. In addition to strong leadership and involvement from all levels of the organization, these programs and procedures form the
cornerstone of safety at Western, ensuring that employees are provided a safe and healthy environment and are intended to reduce workplace
accidents, incidents and losses, comply with all mining-related regulations and provide support for both regulators and the industry
to improve mine safety.
The operation of our U.S. based mine is subject
to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act
of 1977 (the “Mine Act”). MSHA inspects our mine on a regular basis and issues various citations and orders when it believes
a violation has occurred under the Mine Act Following passage of The Mine Improvement and New Emergency Response Act of 2006, MSHA significantly
increased the number of citations and orders charged against mining operations. The dollar penalties assessed for citations issued has
also increased in recent years.
Western is required to report certain mine safety
violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
Item 104 of Regulation S-K, and that required information is included in Exhibit 95 and is incorporated by reference in this annual report.
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PART II