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.
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The Company is subject to periodic inspection
by certain regulatory agencies for the purpose of determining compliance by the Company with the conditions of its licenses. In the ordinary
course of business, minor violations may occur; however, these are not expected to result in material expenditures or have any other material
adverse effect on the Company.
A prior owner of the Van 4 Mine had been
granted a first Temporary Cessation from reclamation of the mine by the Colorado Mined Land Reclamation Board (“MLRB”)
which was set to expire June 23, 2017. Prior to its expiration, PRM formally requested an extension through a second Temporary
Cessation. PRM subsequently participated in a public process which culminated in a hearing on July 26, 2017. Prior to the hearing,
three non-profit organizations who pursue environmental and conservation objectives filed a brief objecting to the extension. The
MLRB board members voted to grant a second five-year Temporary Cessation for the Van 4 Mine. Thereafter, the three objecting parties
filed a lawsuit on September 18, 2017. The MLRB was named as the defendant and PRM was named as a party to the case due to the
Colorado law requirement that any lawsuit filed after a hearing must include all of the parties in the proceeding. The plaintiff
organizations are seeking for the court to set aside the board order granting a second five-year Temporary Cessation period to PRM
for the Van 4 Mine. The Colorado state Attorney General
was defending this action in the Denver Colorado District Court. On May 8, 2018, the Denver Colorado District Court ruled in favor,
whereby the additional five-year temporary cessation period was granted. The Plaintiffs appealed this ruling to the Colorado Court
of Appeals and on July 25, 2019 the ruling was reversed, ruling that the additional five-year temporary cessation period should not
have been granted.
The MLRB and the Colorado Attorney General advised
Western that it will not make an additional appeal of the ruling. Further, the time period for an appeal has passed. The Judge has subsequently
issued an instruction for the MLRB to issue an order revoking the permit and putting the Van 4 Mine into reclamation. On January 22, 2020,
the MLRB held a hearing and on March 2, 2020, the MLRB issued an order vacating the Van 4 Temporary Cessation, revoking the permit and
ordered commencement of final reclamation, which must be completed within five (5) years. The Company commenced reclamation of the Van
4 Mine but progress has been delayed both by COVID-19 restrictions and countywide fire and open flame restrictions. The reclamation cost
is fully covered by the reclamation bonds posted upon acquisition of the property.
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.
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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 had until April 19, 2022 to appeal the Denver District Court’s
ruling. Neither the Company nor the MLRB appealed the Denver District Court ruling. Subsequently on March 20, 2023, the MLRB issued
a board order for the Company to commence final reclamation, which upon completion will terminate mining operations at the Topaz
Mine. Reclamation is to commence immediately at the Topaz Mine and is to be completed within five years by March 2028. The Company
is currently 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 the federal land at the Topaz Mine and needed to re-permit the Topaz Mine with
Colorado’s DRMS .
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
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.