Item 1. Business
ITEM 1. BUSINESS
CORPORATE HISTORY
Western Uranium & Vanadium Corp. (“Western”
or the “Company”, formerly Western Uranium Corporation) was incorporated in December 2006 under the Ontario Business Corporations
Act. On November 20, 2014, the Company completed a listing process on the Canadian Securities Exchange (“CSE”). As part of
that process, the Company acquired 100% of the members’ interests of Pinon Ridge Mining LLC (“PRM”), a Delaware limited
liability company. The transaction constituted a reverse takeover (“RTO”) of Western by PRM. Subsequent to obtaining appropriate
shareholder approvals, the Company subsequently reconstituted its board of directors and senior management team. Western is a Canadian
domestic issuer and Canadian reporting issuer.
On August 18, 2014, the Company closed on
the purchase of certain mining properties in Colorado and Utah from Energy Fuels Holding Corp. Assets purchased included both owned
and leased lands in Utah and Colorado, and all represent properties that have been previously mined for uranium to varying degrees
in the past. The acquisition included the purchase of the Sunday Mine Complex. The Sunday Mine Complex is located in western San
Miguel County, Colorado. The complex consists of the following five individual mines: the Sunday mine, the Carnation mine, the Saint
Jude mine, the West Sunday mine and the Topaz Mine. The operation of each of these mines requires a separate permit, and all such
permits have been obtained by Western and are currently valid. In addition, each of the mines has good access to a paved highway,
electric power to existing declines, office/storage/shop and change buildings, and an extensive underground haulage development with
several vent shafts complete with exhaust fans. The Sunday Mine Complex is the Company’s core resource property and in July
2021 was assigned “Active” status when mining operations were restarted.
On September 16, 2015, Western completed its acquisition
of Black Range Minerals Limited (“Black Range”), an Australian company that was listed on the Australian Securities Exchange
until the acquisition was completed. The acquisition terms were pursuant to a definitive Merger Implementation Agreement entered into
between Western and Black Range. Pursuant to the agreement, Western acquired all of the issued shares of Black Range by way of Scheme
of Arrangement (“the Scheme”) under the Australian Corporation Act 2001 (Cth) (the “Black Range Transaction”),
with Black Range shareholders being issued common shares of Western on a 1 for 750 basis. On August 25, 2015, the Scheme was approved
by the shareholders of Black Range, and on September 4, 2015, Black Range received approval by the Federal Court of Australia. In addition,
Western issued options to purchase Western common shares to certain employees, directors, and consultants. Such stock options were intended
to replace Black Range stock options outstanding prior to the Black Range Transaction on the same 1 for 750 basis.
In connection with the Black Range Transaction,
Western acquired the net assets of Black Range. These net assets consist principally of interests in a large uranium resource located
in Colorado (the “Hansen-Taylor Complex”) and a 100% interest in a 25 year license for Kinetic Separation (“Kinetic
Separation”, formerly known as “Ablation”) and related patents from Ablation Technologies, LLC. The Hansen-Taylor Complex
is principally a sandstone-hosted deposit that was discovered in 1977.
Furthermore, related to Kinetic Separation in
connection with the acquisition of Black Range, the Company assumed a call option agreement between Black Range and Mr. George Glasier.
Prior to the Black Range Transaction, George Glasier, the Company’s CEO, who is also a director of the Company (“Seller”),
transferred his interest in a former joint venture with Ablation Technologies, LLC to Black Range. In connection with the transfer, Black
Range issued 25 million shares of Black Range common stock to Seller and committed to pay $309,138 (AUD $500,000) to Seller within 60
days of the first commercial application of the Kinetic Separation. Western assumed this contingent payment obligation in connection with
the Black Range Transaction.
Under United States Securities and Exchange Commission
(“Commission”) rules, the Black Range transaction triggered the Company being deemed a United States domestic issuer and losing
its foreign private issuer exemption. On April 29, 2016, the Company filed a Form 10 registration statement with the Commission after
shifting its basis of accounting from IFRS to U.S. GAAP. On June 28, 2016, the Company’s registration statement became effective
and Western became a United States reporting issuer.
On June 30, 2023, Western re-qualified as a foreign private issuer
as that term is defined in Rule 3b-4(c) promulgated under the Exchange Act. As a result, the Company may now utilize certain accommodations
made to foreign private issuers, including (1) an exemption from complying with the Commission’s proxy rules, (2) an exemption from
the Company’s insiders having to comply with the reporting and short-swing trading liability provisions of Section 16 under the
Exchange Act, (3) the ability to make periodic filings with the Commission on the Form 20-F and Form 6-K foreign issuer forms, and (4)
the ability to offer and sell unrestricted securities outside of the United States pursuant to Rule 903 of Regulation S. The Company plans
to take advantage of these accommodations. However, the Company currently has decided to voluntarily continue to file periodic reports
with the Commission using domestic issuer forms including filing annual reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K. On the subsequent measurement date, June 30, 2024, Western reconfirmed its qualification as a foreign private issuer.
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The Kinetic Separation process is dramatically
different from conventional mining techniques. Subject to regulatory approvals for its use, Kinetic Separation is beneficial in the following
ways:
● Mining,
crushing, and separation of waste from minerals (uranium and vanadium), can occur underground (inside the mine), at the mine above ground,
at a location between the mine and the mill, or at the mill.
● Value-added
of the process is that 85%-90% of the waste is separated at earlier steps in the process thus saving costs in later steps.
● Benefits
include reduced radiometric exposure, time duration of material handling is reduced, lower costs for transportation.
● Processing
reduced ore quantities is beneficial at the mill stage due to the reduction in acid and power consumption, and post-milling tailings.
Kinetic Separation can be used on legacy uranium
stockpiles in the western United States, removing 85-90% of the uranium. This is an application through which Kinetic Separation could
positively contribute to the “greening of the environment”. According to a study there are approximately 4,225 legacy uranium
mines from the 1940-1970 period throughout the Western United States, most of which have waste stockpiles. At the present time, kinetically
separating these legacy stockpiles is not currently planned by the Company.
In the estimation of management, Kinetic Separation
mining allows the cost of production of uranium to be reduced by 44-53%.
Our common shares are listed on the Canadian Securities
Exchange, also known as the “CSE,” under the symbol “WUC”, and are also quoted in the United States on the OTCQX
Best Market under the symbol “WSTRF.” We are headquartered in Ontario, Canada with mining operations in the two U.S. states
of Utah and Colorado. The mailing address of our headquarters is 5 Church Street, Toronto, Ontario, M5E 1M2, Canada, and the telephone
number is (970) 864-2125. Our corporate website is located at http://www.western-uranium.com/.
We are an “emerging growth company”
as that term is defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act defines an “emerging
growth company” as one that had total annual gross revenues of less than $1,235,000,000 during the last fiscal year. Section 102(b)
(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a
class of securities registered under the Securities Exchange Act) are required to comply with the new or revised financial accounting
standard. The JOBS Act also provides that a company can elect to opt out of the extended transition period provided by Section 102(b)(1)
of the JOBS Act and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
Our wholly-owned subsidiaries are Western Uranium
Corporation (Utah) (“Western Utah”), PRM, Black Range, Black Range Copper Inc., Ranger Resources Inc., Black Range Minerals
Inc., Black Range Minerals Colorado LLC, Black Range Minerals Wyoming LLC, Haggerty Resources LLC, Ranger Alaska LLC, Black Range Minerals
Utah LLC, Black Range Minerals Ablation Holdings Inc., Black Range Development Utah LLC, Maverick Strategic Minerals Corp, Pinon Ridge
Corporation (“PRC”) and Mustang Mineral Processing Inc (“Mustang”).
OUR COMPANY
Western is in the business of exploring,
developing, mining and production of its uranium and vanadium resource properties in the states of Utah and Colorado in the United
States of America (“United States”).
Western is an exploration stage issuer for purposes
of S-K 1300. Under S-K 1300, a mining company like ours can be classified as either an exploration stage issuer, a development stage issuer
or a production stage issuer. Exploration stage issuers are companies that are engaged in the search for mineral deposits, which are not
in either the development stage or the production stage. In order to be classified as a development stage issuer or a production stage
issuer, the Company must have already established mineral reserves. The Company has not established mineral reserves for purposes of S-K
1300.
Our mineral properties are located in western Colorado and eastern
Utah and adjacent areas of the western United States. We have committed to permitting and building our own mill to process uranium and
vanadium and incorporating Kinetic Separation into our licensing. Our primary focus consists of the mining operations at the fully permitted
Sunday Mine, the commercialization of Kinetic Separation, completing the permitting and construction of mineral processing facilities
(uranium and vanadium), and permitting the San Rafael Project.
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The Sunday Mine Complex is located in western
San Miguel County, Colorado. The complex consists of the following five individual mines: the Sunday mine, the Carnation mine, the Saint
Jude mine, the West Sunday mine and the Topaz mine. The operation of each of these mines requires a separate permit and all such permits
have been obtained by Western and are currently valid. In addition, each of the mines has good access to a paved highway, electric power
to existing mine workings, office/storage/shop and change buildings, and extensive underground haulage development with multiple vent
shafts complete with exhaust fans.
We have acquired a license for Kinetic Separation,
which provides a low cost, purely physical, method of separating uranium and vanadium mineralization from waste. No chemicals are added
in the process, yet very high mineral recoveries can be achieved with considerable mass reduction; facilitating the separation of a high-value,
high-grade ore product from a coarse-grained barren “clean sand” product.
Application of Kinetic Separation is expected
to have a very positive effect on the development of not only our Sunday Mine Complex, but also most of our and other deposits, because
it significantly reduces both capital and operating costs. Extensive test work has shown that from amenable sandstone-hosted ore types,
typically more than 90% of the mineralization can be separated into 10-20% of the initial sample mass.
OUR STRATEGY
Our vision is to become a regional uranium and vanadium developer,
producer, and processor. Our strategy is to build value for shareholders by advancing our projects for further scaled-up mining production.
We have committed to permitting and building our own processing plant to mill uranium and vanadium and incorporating Kinetic Separation
into our licensing. Facility design and permitting have begun on parcels of land acquired in Utah and Colorado, on which we intend to
develop and build our processing facilities. In 2022, Western began acquiring mining equipment and vehicles and building a mining team
to put in place an in-house mining capability and to replace its previous outsourced mining contractor. During 2024 and 2023, this team
was conducting mining operations at the Sunday Mine Complex developing the mine for future production and extracting ore to be stockpiled
underground, to assure the availability of feedstock to baseload the mineral processing facilities.
At any time we may have acquisition or partnering
opportunities in various stages of active review, including, for example, our engagement of consultants and advisors to analyze particular
opportunities, analysis of technical, financial and other confidential information, submission of indications of interest, participation
in preliminary discussions and negotiations, and involvement as a bidder in competitive processes.
Capital Raising
On November 20, 2024, the Company closed a
private placement of 4,142,906 units at a price of $0.94 (CAD $1.32) per unit. The aggregate gross proceeds raised in the private
placement amounted to $3,897,166 (CAD $5,468,636) and proceeds net of issuance costs were $3,546,870 (CAD $4,975,966). Each unit is
comprised of one common share of Western and one common share purchase warrant. Each warrant is exercisable into one common share at
a price of $1.27 (CAD $1.78) per share for a period of four years following the closing date of the private placement.
On December 12, 2023, the Company closed a non-brokered
private placement of 5,215,828 units at a price of $1.02 (CAD $1.39) per unit. The aggregate gross proceeds raised in the private placement
amounted to $5,324,989 (CAD $7,250,000 as of December 31, 2023). Issuance costs, consisting principally of commissions and legal fees,
were $488,122 (CAD $661,912 as of December 31, 2023). Each unit consisted of one common share plus one half of one warrant. Each warrant
is exercisable into one share at a price of $1.38 (CAD $1.88) per common share for a period of four years following the closing date of
the private placement. A total of 5,215,828 common shares and warrants to purchase 2,607,913 common shares were issued to investors in
connection with the private placement.
During the years ended December 31, 2024 and 2023,
an aggregate of 5,198,540 and 1,165,450 warrants were exercised for total proceeds of $4,605,458 (CAD $6,238,248) and $1,004,044 (CAD
$1,358,565), respectively.
On November 28, 2024, The Company’s Board approved amendments
to extend the term and reduce the exercise price of 2,868,541 previously issued common share purchase warrants. These warrants, originally
issued during December 2021 and January 2022, had initial exercise prices of $1.94 (CAD $2.50) and $2.00 (CAD $2.50) per share, respectively,
and were set to expire three years post-issuance. Effective November 28, 2024, the term was extended to January 20, 2026, a date that
is less than five years since the original date of issuance. Effective February 27, 2025 the exercise price was reduced to $1.39 (CAD
$2.00), the date upon which the Canadian Securities Exchange (CSE) accepted the warrant repricing and the amended Form 13 filing was approved
for filing. During the year ended December 31, 2024, the Company recorded an incremental fair value of $184,308 arising from the extension
of the term. On February 27, 2025, the Company recorded an incremental fair value of $104,840 for the modification of the exercise price.
The cost of the warrant modifications was accounted for as a cost of raising capital. This modification was granted to facilitate the
raising of additional equity capital by extending the exercise period and lowering the exercise price, thereby providing warrant investors
with more time and incentive to exercise their warrants.
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Uranium/Vanadium Production
Western historically positioned itself for operational
flexibility with the goal of beginning production as expeditiously as possible once market conditions for uranium and/or vanadium were
favorable. Well maintained existing infrastructure from years of previous production allowed the Company to quickly advance the mine to
a production ready status.
The 2018 vanadium price rally catalyzed a project
at the Sunday Mine Complex. Western reinitiated active mining operations during 2020 at the Sunday Mine Complex project beginning with
infrastructure and exploratory work projects, which culminated in the commencement of production with the mining and stockpiling of the
extracted uranium/vanadium ore. The mining team refocused on surface infrastructure projects required by the DRMS before COVID-19 stoppages
caused the mines to be put back into Temporary Cessation.
During 2020, COVID-19 induced mine closures began
a rally in uranium prices. In 2021, catalysts continued to provide positive signals for uranium miners and investors. This catalyzed work
during 2021 and 2022 at the Sunday Mine Complex project which commenced in July 2021. After completion of infrastructure work in this
new area of the mine, exploration and development of the GMG ore body was the first project phase. Drifting, continuous high-grade ore
was intersected, which led to the mining and underground stockpiling of over 3,000 tons of uranium/vanadium ore during the December 2021
to March 2022 period.
Thereafter, Western began the acquisition of a full complement of mining
equipment and personnel to take over mining operations. Western’s transition from employing a mining contractor to building an in-house
mining operation has now been substantially completed. Since this transition began in spring 2022, additional employees have been hired
to support mining operations and mining equipment and vehicles have been acquired to support deployment of two (2) fully equipped mining
teams. The equipment has been prepared for operations and readied for deployment; site infrastructure upgrades have been finished. In
early 2023, the mines were reopened for ventilation and infrastructure upgrades. Mining operations restarted in April 2023 and have been
continually focused on additional development in multiple areas of the mine.
It may be difficult for many uranium mining companies
to expand production in a timely manner in response to rising uranium prices, as it requires many years of permitting and development
to bring new mines into production. These lead times will put further upward pressure on prices. Thus, Western has a competitive advantage,
due to the aforementioned projects, because our mining properties can scale-up production on short notice.
The Company holds an exclusive 25-year license
to use Kinetic Separation, a proven technology that we anticipate will improve the efficiency of hauling and processing ore from Western’s
sandstone-hosted mines. The Company has proven that post-Kinetic Separation ore has 90% of the uranium mineralization of the pre-Kinetic
Separation ore in 10% of its mass. We are planning to build a Kinetic Separation machine, with a capacity of forty tons per hour at an
aggregate cost of $1.0 million dollars. The license agreement was entered into on March 17, 2015 and expires on March 16, 2040. There
are no remaining license fee obligations and there are no future royalties due under the agreement. The Company has the right to sub-license
the technology to third parties. The Company may not sell or assign the Kinetic Separation license; however, it could be transferred in
the sale of Western or the subsidiary holding the license.
Prior to the planned processing plant becoming
licensed and operational, our in-house mining teams will be stockpiling uranium/vanadium mined material. When the processing plant is
constructed, Western will become fully operational and begin processing the accumulated stockpiles. Western believes that its mineral
resources have a reasonable prospect for economic extraction. However, the Company has not completed a preliminary economic assessment
under NI 43-101 or a feasibility study or preliminary feasibility study under S-K 1300 that would be needed to establish the existence
of proven or probable reserves and has instead allocated that capital to the aforementioned mining operations at the Sunday Mine Complex.
Uranium/Vanadium Processing Facilities Development
Mustang Minerals Processing
Plant
Our current plans call for the permitting and construction of a mineral
processing plant at our newly acquired site in Colorado. Western expects to benefit from the prior site owner’s completion of all
phases of licensing and permitting of the Pinon Ridge Mill project. The Company’s plans are to develop its initial mill at the Colorado
location, which is much closer to the Sunday Mine Complex than the Maverick site. This mill is expected to have a cost of approximately
$75 million and is targeted to start up in 2029. This facility will be designed to recover uranium and vanadium both from conventional
materials mined from Company mines and materials produced by other mining companies. The processing plant will utilize the latest processing
technology, including Western’s patented Kinetic Separation process. These technology advancements will result in lower overall
capital and processing costs. After permitting and construction, and subject to the availability of financing, the processing of uranium
and vanadium materials is expected to commence in early 2029.
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Maverick Minerals Processing Plant
The development of the Maverick Minerals Processing
Plant in Green River, Utah, has advanced since this project commenced. In the second quarter 2023, the land acquisition was completed
and in the third quarter 2023 the project design and permitting activities began with the engagement of a full team of consulting firms,
chosen for their expertise in engineering / mill design, permit preparation, environmental, hydrology, and air quality. Site evaluation
work was undertaken and a preliminary plant and property site plan was compiled for the location of monitor wells, meteorological towers,
buildings, processing circuits, tailings and evaporation ponds, roads/infrastructure and ore storage facilities. At a pre-application
permitting meeting in November 2023, the Company and its consultants met onsite with local officials. During 2024, additional baseline
data required for submission of the permitting application was collected from the onsite meteorological towers. A final plant and animal
study was completed. This study confirmed the site is clear of endangered plant life that is only observable during the spring growing
season. Additional consulting commitments were made to advance the licensing and development with Precision Systems Engineering (PSE),
a leading engineering and design consulting firm headquartered in Sandy, Utah. PSE was working to release the preliminary engineering
design and cost estimate for a 500 ton per day mill. Next steps for site work included the planned installation of monitor wells. Additional
work has been deferred while Western reassesses its design and strategy now that it has purchased a previously licensed mill site in Colorado
(please see Colorado Mill Site Purchase, below). This location remains valuable to Western due to its close proximity, approximately 4
miles, to the San Rafael project which is slated as Western’s second production center.
Mustang Mineral Processing Site Acquisition
On October 1, 2024, Western, through its wholly
owned subsidiary, Western Utah, executed a binding stock purchase agreement (the “PRC Agreement”) to purchase 100% of the
shares of PRC from a private investor group and thereby acquire Mustang, which is a wholly owned subsidiary of PRC. Mustang owns an 880-acre
property located in Montrose County, Colorado, where a uranium processing mill was previously licensed but never constructed. The acquisition
becomes the second property that Western has acquired, in addition to the Maverick site in Utah. It also becomes part of Western’s
plans for developing and licensing one or more uranium and vanadium processing facilities to process production from its resource properties
in Colorado and Utah.
Pursuant to the PRC Agreement, the former PRC shareholders were paid
$829,167 for their equity and shareholder loans. After closing, a creditor holding a security interest against Mustang was paid a total
of $1,148,125 to retire an outstanding promissory note. Western also assumed certain PRC liabilities in the transaction and royalty obligations
to an unrelated third party with future commitments to be satisfied. These royalties are based on the volume of minerals processed through
any mineral processing plant located on the property.
The transaction was accounted for as a purchase
of an asset.
URANIUM MARKET OUTLOOK
World demand for clean, reliable, and affordable
electricity is growing. The future demand for uranium is expected to increase due to the construction of additional nuclear reactors around
the world. Multiple Japanese utilities have nuclear reactors in the process of restarting. Chinese utilities continue to aggressively
build new reactors and buy uranium, with the goal of becoming the world leader in nuclear electricity generation. In total, according
to the World Nuclear Association (WNA), there are many new reactors under construction in the world. Existing and new nuclear technologies
are receiving unprecedented support on a global basis, as a base load electricity source with zero carbon emissions.
After the 2011 Fukushima nuclear accident, uranium markets endured
a decade long bear market due to excess supply created by nuclear reactor shutdowns and large quantities of new material entering the
market. In recent years, this excess supply has been depleted by utility use, production curtailments, COVID-19 induced production suspensions,
and financial buyers purchasing physical uranium (“U3O8”). A uranium global supply/demand imbalance had been projected by
analysts to impact uranium prices in coming years. In 2020 COVID-19 induced mine closures and in 2021 Sprott Physical Uranium Trust (“SPUT”)
purchased 23 million lbs of U 3 O 8 , underscoring the imbalance. Both of these catalysts have depleted excess inventories
and accelerated the timing of the supply/demand impact. Demand is increasing with new reactors being built, next generation reactors being
advanced, operating reactor life being extended, idle reactors being restarted, and nuclear phase-out plans being reversed. At a macro-level,
the electrification transition and climate change initiatives have increased global support for nuclear.
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In 2022, geopolitical events became the main driver
of uranium markets. During January, mass government protests in Kazakhstan were suppressed by the Collective Security Treaty Organization,
a military alliance of regional allies led by Russia. Uranium markets reacted as Kazakhstan was responsible for 45% of the 2021 global
uranium production. In February, the Russian invasion of Ukraine added more volatility due to Russia’s dominant position in nuclear
fuel services including 38% of world conversion capacity and 46% of world enrichment capacity. These events led to new SPUT capital inflows
and the purchase of 12 million lbs of U3O8 during the first quarter of 2022.
With equity markets having their worst year since 2008, 2022 became
a transformational year for the normally staid nuclear power and physical uranium markets as the status quo was disrupted. There was a
rush on contracts for the limited available conversion and enrichment capacity which caused a price surge. Due to shrinking secondary
supplies, utilities followed by signing new uranium supply contracts that increased long-term U3O8 prices from $43 to $52 during the year.
The real uranium industry bull market was in the
underlying fundamentals attributable to multiple factors, including: climate change, energy security, supply chain and energy scarcity
initiatives. This inflection point will likely impact markets for decades as the supply/demand imbalance has flipped from a market with
excess supply into a market with excess future demand. With the reduced availability of secondary supplies, utilities have added multi-year
contracts with mining companies for primary supply. The drivers expanding the demand for nuclear fuel include: non-nuclear nations adding
nuclear power generation, nuclear nations expanding fleets and/or extending lives of existing reactors, idled nuclear reactors being re-started,
reactors being phased out and shutdowns being reversed, and the deployment of advanced reactors / SMRs. However, the challenge is in meeting
increasing demand while being constrained from sourcing new material from the world’s largest suppliers.
Russia’s invasion of Ukraine and the ensuing
global energy crisis has focused attention on security of supply and supply chain risks and has caused most of the world to re-evaluate
their dependence upon nuclear fuel exported by Russia. The dominant market position of Rosatom, Russia’s national nuclear company,
was developed through decades of government subsidies. Because of the Ukraine invasion, new contracts are largely not being signed with
Rosatom, and deliveries under existing contracts continue to be made. Future deliveries potentially could be at risk due to sanctions
/ legislation or a Russian embargo. Customer dependencies upon the Russian supply of uranium, conversion and enrichment are being addressed
slowly by governments as alternative suppliers are not currently available. A secondary concern is Kazakhstan, the world’s largest
uranium producing country and the second longest continuous land border in the world shared with Russia. The concern is Russia exerting
influence over Kazakhstan amid their currently strained relationship. Additionally, Kazatomprom has put in place infrastructure to supply
uranium to China under its 15 year plan to deploy 150 new nuclear reactors. In 2022, it has become evident that this small area of the
world has emerged to form the key drivers in the future of the global nuclear fuel cycle.
In July 2023, the government of Niger was overthrown
by its military. This is significant because the new regime is opposed to Western interests and this landlocked West African country holds
the 7th largest uranium resource in the world and was producing about 5% of global production. Multiple uranium mine development projects
in the county continue to proceed despite the evacuation of many foreign nationals. The situation in Niger is a developing matter and
the conflict has an anti-French sentiment. The Junta has initiated multiple actions that are counter to French interests. Most importantly,
Niger’s Junta has threatened the export of uranium to France which has serious implications because France had acquired 20% of its
natural uranium from Niger.
In December 2023, in a show of bipartisan support,
the U.S. House of Representatives passed the Prohibiting Russian Uranium Imports Act. The reliance on Russian uranium, conversion and
enrichment services is being viewed quite differently than it has for decades. The legislative process toward enacting a Russian uranium
ban culminated in one being enacted in May 2024. However, the ban will not take full effect until 2028, and it appears that multiple waivers
have been granted on preexisting contracts.
Spot uranium prices reacted to longer-term supply/demand
constraints and geopolitical risks hitting their peak at over $100/lb in January 2024. During 2024, there were periods of notable support
as giant tech companies made plans to utilize nuclear energy and artificial intelligence (AI) and data centers were projected to consume
increasing amounts of energy in the future. While term prices increased to the $80/lb range, spot uranium prices have endured a slow decline
from the high to the $64/lb level at the end of March 2025.
Events of the last few years have set in motion uranium market and
nuclear fuel opportunities for the next decade and beyond. There are positive catalysts across multiple levels of the nuclear fuel and
uranium markets. This is occurring at a time when aggregate uranium inventory has declined to its lowest levels in over a decade. We believe
that restocking of utility inventories, new demand and shifting demand will catalyze a uranium bull market that will increase uranium
prices toward levels that will drive uranium mining company production, profits and equity prices. As a result, Western made the largest
investments in the Company’s history during 2024 in advancing its operational strategy and mining operations.
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Nuclear Fuel and Uranium Effect from the
Russian Invasion of Ukraine
The start of the Russia/Ukraine war created extraordinary
volatility in uranium markets during the first half of 2022. At the peak, the spot price was at an 11 year high. Prior to the invasion
on February 24, 2022, uranium spot prices were in the $43 per pound range and rose to slightly over $63 per pound by April 2022; an increase
of approximately $20 per pound. Later in May 2022 and June 2022, the spot price receded to $45 levels, before recovering to the $50 +/-
per pound price level. This price level was maintained for an extended period as the immediate ban/sanctions anticipated by investors
of nuclear fuel and services from Russia couldn’t be implemented.
Equity markets followed the price action of physical
uranium prices in speculation that governments worldwide would sanction and ban nuclear fuel from Russia. This was in recognition of Russia’s
dominant position in nuclear fuel services including 38% of world conversion capacity and 46% of world enrichment capacity. The market
position of Rosatom, Russia’s national nuclear company, was developed through decades of government subsidies. However, because
of the lack of replacement capacity in the global nuclear fuel cycle, Rosatom has avoided sanctions.
Because of the Ukraine invasion, new contracts
are largely not being signed with Rosatom, but deliveries under existing contracts continue to be made. Customer dependencies upon the
Russian supply of uranium, conversion and enrichment are being addressed slowly by governments as alternative suppliers were not currently
available. However, a desire to stay away from bad actors and the threat of Russia weaponizing energy exports or a Russian embargo has
elicited responses. Worldwide, utilities have accelerated their contracting of non-Russian conversion and enrichment services. New uranium
supply agreements are being signed with western producers. There has been significant legislative progress favorable to increasing domestic
uranium and nuclear fuel production in the United States. In advance of the United States putting in place a ban or sanctions on Russian
uranium, the DOE continues to make preparations for a Russian counter-sanction terminating the flow of nuclear fuel and services from
Russia.
In January 2023, ban and sanction discussions
intensified as Rosatom was shown to have become an active participant in the Ukraine war. An article entitled “Russia’s nuclear
entity aids war effort, leading to calls for sanctions” was published by the Washington Post. Obtained documents show that the Rosatom
state nuclear power conglomerate was supplying the Russian military with “components, technology, and raw materials for missile
fuel” to be used in the Ukraine war.
United
States Ban of Russian Uranium
In response to Russia’s war in Ukraine, the United States legislature passed
the Prohibiting Russian Uranium Imports Act (H.R. 1042) to ban Russian uranium imports into the U.S. Unanimous passage of The Prohibiting
Russian Uranium Imports Act (H.R. 1042) in April 2024 by the U.S. Senate followed the U.S. House of Representatives’ passage of
the bill in December 2023. Subsequently, on May 13, 2024, President Biden signed this legislation into law. The ban became effective
90 days after its enactment on August 11, 2024 and was phased in under Department of Energy conditional waivers before becoming a complete
ban on January 1, 2028. Importantly, the enactment of a Russian ban releases funding to support the American nuclear supply chain. This
funding was deployed by the DOE under a new program called the Low-Enriched Uranium (LEU) – Enrichment Acquisition. The United
States has the world’s largest civilian nuclear reactor fleet, and it has now taken steps to reduce its reliance on state-sponsored
Russian nuclear fuel.
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Russian
Response to Uranium Ban
On May 14, 2024, the day following the ban enactment, Bloomberg reported that Russia had responded
with TENEX issuing force majeure notices to U.S. utility customers. TENEX is the subsidiary of Rosatom, the state nuclear energy corporation,
and the entity through which U.S. counterparties contract for Russian uranium product imports into the United States.
The TENEX force majeure notices required U.S. customers to secure waivers
within 60 days that exempt them from the new U.S. Russian uranium ban or risk being moved to the back of the line for uranium deliveries
if they are granted a waiver later. TENEX’s notice was based on their intention to honor their contracts, but they acknowledge this
could be overridden by the Kremlin. This deadline has now passed and the DOE is currently granting waivers to the ban. Multiple waivers
have been partially or fully approved, however the details are not in the public domain.
On May 21, 2024, the DOE published their process and instructions for
requesting a waiver. The waiver process does not appear restrictive and will likely allow most of the previously contracted Russian material
into the United States prior to January 1, 2028. The U.S. legislative intentions were to deprive Russia of the revenue associated with
U.S. purchases of Russian nuclear fuel and counter Russia’s control of the global nuclear fuel cycle by flooding U.S. and international
markets with state-supported Russian uranium and services.
We continue to believe the shift away from Russia/Rosatom
will be a major catalyst in the realignment of nuclear fuel markets which will benefit western producers.
OVERVIEW OF THE URANIUM INDUSTRY
The only significant commercial use for uranium
is as a fuel for nuclear power plants for the generation of electricity. The global nuclear and uranium mining industries continue to
benefit from the convergence of multiple trends and increased public, political and government support due to coming new technologies,
climate change initiatives, and energy crisis shortages. These are resulting in extensions to operating lives, a large number of nuclear
reactors under construction, new builds, investments in next generation nuclear technology, and in Japan, increased urgency to re-start
the nuclear reactor fleet. Additionally with the rapid expansion of artificial intelligence (AI) the demand for electricity is surging,
particularly to power energy-intensive data centers. This increase in electricity consumption is driving greater reliance on nuclear power,
a reliable energy source, thereby strengthening the demand for uranium as a critical fuel for nuclear reactors.
The uranium market has historically been highly
cyclical. In the prior bull market, spot prices rose from $21 per pound in January 2005 to a high of $136 per pound in June 2007 in anticipation
of sharply higher projected demand as a result of a resurgence in nuclear power and the depletion of secondary supplies. Secondary supplies
are inventories of uranium not publicly available for sale, which are primarily held by utility companies and governments. The sharp price
increase was driven in part by high levels of buying by utility companies, which resulted in most utilities covering their requirements
through 2009. A decrease in near-term utility demand coupled with rising levels of supplies from producers and traders led to downward
pressure on uranium prices beginning in the third quarter of 2007. A rebound in uranium prices in conjunction with a recovery in commodities
in 2010 was curtailed by the Fukushima disaster in Japan.
Since the Fukushima disaster in 2011, uranium spot prices entered a
steady decline until June 2014, when they rebounded slightly and peaked again in March 2015 at $39 per pound. After that peak, prices
again began to fall steadily, reaching their lowest point of $18 per pound in November 2016. Prior to COVID-19, annual uranium production
was at its lowest in over a decade, creating a global supply deficit where production was only about two-thirds of consumption. In May
2020, after COVID-19 related production shutdowns, spot prices hit a $34 per pound price before declining to close the year at $30 per
pound. During 2021, market participation by the Sprott Physical Uranium Trust and other secondary market uranium buyers caused prices
to rise to $42.05 per pound at December 31, 2021. Uranium prices held these levels until Russia’s invasion of Ukraine caused uranium
markets to surge. Prior to the invasion on February 24, 2022, uranium spot prices were in the $43 per pound range and rose to slightly
over $63 per pound by April 2022. Later in May 2022 and June 2022, the spot price receded to $45 levels, before recovering to the $50
+/- per pound price level in September 2022 to March 2023. Subsequently in July 2023, spot uranium increased from the approximately $50/lb
level to over $100/lb in January 2024. Since January 2024, spot uranium had a slow decline from a high of $100/lb level to $64/lb level
at the end of March 2025.
Geopolitical events, technological advances, and the nuclear energy
growth path provide favorable pricing factors specific to the uranium industry. As a result, we foresee a uranium pricing environment
which in the coming years will allow Western to initiate full-scale production at its best properties. As a result, Western made the largest
investments in the Company’s history during 2024, advancing its operational strategy and mining operations.
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Nuclear Fuel and Uranium Market Conditions
During the year ended December 31, 2024, the spot uranium price decreased
$18 from $91 to ~$73. Notably, the long-term price increased from $68 to ~$81 during a period of rising conversion and enrichment services
prices. However, this follows an extremely strong period in the market where spot uranium prices have reacted to supply/demand constraints
and geopolitical risks. Since January 2024, spot uranium had a slow decline from a high of $100/lb level to $64/lb level at the end of
March 2025. The events of 2022 set in motion uranium market and nuclear fuel opportunities for the next decade and beyond. There are positive
catalysts across multiple levels of the nuclear fuel and uranium markets. Underlying fundamentals are the strongest in decades. This is
attributable to multiple factors, including climate change, energy security, supply chain and energy scarcity initiatives. The supply/demand
imbalance has flipped from a market with excess supply into a market with excess future demand. With the reduced availability of secondary
supplies, utilities have begun adding multi-year contracts with mining companies for primary supply. The drivers expanding the demand
for nuclear fuel include non-nuclear nations adding nuclear power generation, nuclear nations expanding fleets and/or extending lives
of existing reactors, idled nuclear reactors being redeployed, the reversal of phase-outs and shutdowns, and the deployment of advanced
reactors / SMRs. However, the challenge is in meeting increasing demand simultaneously with supply constraints from the world’s
largest suppliers. We believe uranium equity prices will continue to strengthen and reflect the underlying positive fundamentals in the
nuclear/uranium sector. Multiple market analysts have flagged low availability of mobile secondary inventories. We believe the continued
draw down of inventories to be a market catalyst for uranium prices.
Positive nuclear energy news has continued to
highlight the global growth of future nuclear electricity generation which will drive increased nuclear fuel demand. In terms of future
supply, utility contracting has continued into 2024, and some uranium mining companies are moving toward restarting production. However,
due to the lead time needed for future uranium production, we are entering a phase where the supply-demand fundamentals are in a deep
multi-year structural supply deficit. The future is not clear as we believe some miners with available near-term production are waiting
for higher price levels and/or project funding before making full start-up commitments. Utilities are also deferring contracting to understand
how regulations and geopolitics will modify their future access to Russian uranium, conversion and enrichment services.
In the second quarter of 2024, investors began
purchasing nuclear and uranium equities as a means to create long exposure for their positive view on Artificial Intelligence (AI), due
to the vast energy requirements of data centers. Recent transactions have been announced as tech giants Microsoft, Amazon, and Google
have sought deals to source nuclear power for their data centers from full scale reactors and SMRs. Microsoft most prominently signed
an agreement with Constellation Energy to restart a Three Mile Island reactor in Pennsylvania and purchase 100% of the power generated
for two decades.
Nuclear Fuel Supply Chain Concentration
Risks
Russia’s invasion of Ukraine and the ensuing
global energy crisis has focused attention on security of supply and supply chain risks. This has caused most of the world to re-evaluate
their dependence upon nuclear fuel exported by Russia. In spite of the dominant market position of Rosatom, future deliveries potentially
could be at risk due to sanctions, legislation, or a Russian embargo. Customer dependence upon the Russian supply of uranium, conversion
and enrichment are being addressed slowly by governments as alternative suppliers are not currently available. Both Urenco and Orano have
announced that they will invest to expand their uranium enrichment capacity respectively in the United States and France, which represents
a shift away from Russia. Utilities are demonstrating their desire for increased security of their nuclear fuel supply chains. Kazakhstan
is also a concern because the world’s largest uranium producing country has an unguarded and the second longest continuous land
border in the world shared with Russia. The potential exists for Russia to exert influence over Kazakhstan. Additionally, Kazatomprom
has put large long-term contracts in place with China. This supply is needed for China to fulfill its 15 year plan to deploy 150 new nuclear
reactors. China National Nuclear Corp. (CNNC) has recently opened a uranium trading hub /warehouse facility, on the China / Kazakhstan
border, with the capacity to store 60 million pounds of uranium. It has become evident that the nuclear fuel supply chain has become increasingly
concentrated and interconnected in this very small area of the world. Expanding Kazakhstan uranium exports to Russia and China significantly
reduces future supply for Western nuclear fuel buyers.
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In July 2023, the government of Niger was overthrown
by its military. This is significant because the new regime is opposed to Western interests and this landlocked West African country holds
the 7th largest uranium resource in the world and was producing about 5% of global production. The conflict has an anti-French sentiment,
and the Junta has initiated multiple actions that are counter to French interests. Most importantly, Niger’s Junta has threatened
the export of uranium to France which has serious implications because France acquires 20% of its natural uranium from Niger. In addition
to the French evacuating/ being expelled from Niger, the U.S. military also departed the country. The Junta is utilizing Russian military
support as a replacement. In addition, the Niger government has revoked operating permits from foreign uranium companies, including Orano
in June 2024 and Goviex in July 2024. In November 2024, Orano further reported that it had lost operational control, to authorities in
Niger, of another of its uranium mines. This mine was in production, but had been impacted by export restrictions imposed by the Junta.
During October 2023, geopolitical instabilities spread further to the
Middle East after a Hamas attack on Israel triggered a counterattack by Israel on the Gaza Strip. The Israel-Hamas hostilities escalated
over the Summer of 2024 and then spread to other countries in the Middle East. At the beginning of 2025, Israel and Hamas agreed to a
ceasefire which ended in March 2025. Hostilities resumed in March and it’s not clear when and if the combatants will be able to
negotiate a new ceasefire or an end to military actions. This additional hot spot further increases volatility in the world and destabilizes
the Middle East region that is highly influential on global energy prices.
Vanadium
With the exception of the Hansen/Taylor Deposit,
most of the Company’s mining assets, including the Sunday Mine Complex, contain vanadium either as a stand-alone product or a co-product
to uranium.
Conventional and new vanadium applications include
steelmaking, aerospace, stationary energy storage, batteries, and chemicals.
When a very small amount of vanadium is added to steel, the hardening
effect greatly increases its strength. And while steelmaking accounts for roughly 90% of all vanadium currently consumed, it is estimated
that vanadium is only used in about 9% of all steels today. After steelmaking, the second largest market for vanadium is that of catalysts
and chemical applications. A significant new source of demand for vanadium is from vanadium redox flow batteries (VRFB) as their adaptation
grows with the stationary storage market.
In 2018 there was structural change in the vanadium
markets that caused prices to spike. China, the largest vanadium producer in the world, had supply disrupted by environmental monitoring
and rules while domestic demand was increasing. China, which had been a net vanadium exporter, flipped and became a net vanadium importer.
On the demand side, China announced a new high strength rebar standard to increase earthquake resistance in February 2018 that became
effective on November 1, 2018. On the supply side, in its efforts to fight pollution, Chinese environmental inspections resulted in the
closing of dirty processes in which vanadium was recovered as a byproduct. These policy changes caused a shortage and led to a surge in
vanadium prices to all-time highs during the fourth quarter of 2018. Vanadium closed on December 31, 2018 at $23.15, but owing to a Chinese
extension in the implementation of the new rebar standard, prices plunged to close on December 31, 2019 at $5.25. Notably, the substantial
price appreciation in vanadium delayed the adaptation of VRFB applications as these batteries were no longer considered to be cost competitive.
A Section 232 National Security Investigation
of Imports of Vanadium was undertaken by the U.S. Department of Commerce (“DoC”) during 2020 and submitted to President Biden
on February 22, 2021. The President had 90 days to decide if he concurred with the findings and recommendations and determine whether
to take an action to mitigate the impairment of national security. No action was taken.
The vanadium market price closed at $5.80 per pound as of December
31, 2024, which was a decrease from the December 31, 2023 closing price of $6.00 per pound. During the first quarter of 2025, vanadium
prices further declined to $5.40. Cyclical business activities and its principal product use as a steel hardener has seen a softening
in demand, resulting in a decline in the price of vanadium.
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Uranium Section 232 Investigation/Nuclear
Fuel Working Group Process
An investigation under Section 232 of the Trade Expansion Act of 1962
was undertaken by the DoC in 2018 to assess the impact to national security of the importation of the vast majority of uranium utilized
by the approximately 100 operative civilian nuclear reactors within the United States. In response to the Section 232 report, the White
House disseminated a Presidential Memorandum in July 2019. At that time, President Trump formed the Nuclear Fuel Working Group (“NFWG”)
to find solutions for reviving and expanding domestic nuclear fuel production and reinvigorating recommendations.
In April 2020, the DoE released the NFWG report
entitled “Restoring America’s Competitive Nuclear Energy Advantage – A strategy to assure U.S. national security.”
The report outlines a strategy for the reestablishment of critical capabilities and direct support to the front end of the U.S. domestic
nuclear fuel cycle. The undertaking of some NFWG findings and recommendations was a positive outcome for the U.S. nuclear industry and
U.S. uranium miners.
The Russian Suspension Agreement was extended
for an additional 20 years until 2040. Existing categories of quotas on imports of Russian uranium into the U.S. were reduced by a graduated
scale, and additional provisions were modified to eliminate loopholes.
In July 2021, the uranium Section 232 report was
publicly released. The report concluded that uranium imports were “weakening our internal economy” and “threaten to
impair the national security” and recommended immediate actions to “enable U.S. producers to recapture and sustain a market
share of U.S. uranium consumption”.
The Russian invasion of Ukraine has fast tracked
the Uranium Reserve Program. On May 5, 2022, the U.S. Secretary of Energy, Jennifer Granholm, testified before the Senate Committee on
Energy and Natural Resources that the DoE “would make direct purchases of domestically mined and converted uranium this calendar
year to establish a strategic uranium reserve”. Secretary Granholm stated that “We should not be sending any money to Russia
for any American energy or for any other reason,” and “if we move away from Russia right away, we want to make sure we have
the ability to continue to keep the fleet afloat.” To accomplish this, she further disclosed that the DoE was “developing
a full-on uranium strategy that’s going through the interagency process.”
Subsequently in June 2022, the U.S. Department of Energy (“DOE”)
released program guidelines to initiate purchases of up to $75 million of U.S. domestic origin uranium inventory from existing storage
at the Honeywell Metropolis Works uranium conversion facility in Metropolis, Illinois. The DOE awarded contracts in December 2022 for
the purchase of 1,100,000 lbs of uranium that were delivered in the first quarter of 2023. Five uranium companies disclosed receiving
contract awards within a price range from $59.50 to $70.50 per pound. Western did not hold qualifying inventory, and as such did not submit
a bid proposal. An expansion of the U.S. Uranium Reserve program continues to be discussed. As originally proposed, the program contemplated
$150M in annual purchases for a 10 year period which would aggregate to $1.5 billion over its lifetime.
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COMPETITION
There is global competition for uranium/vanadium
properties, ore processing mills, capital, customers and the employment and retention of qualified personnel. We compete with multiple
exploration companies for all of these things. In the production and marketing of uranium and vanadium, there are a number of producing
entities globally, some of which are government controlled and several of which are significantly larger and better capitalized than we
are. Several of these organizations also have substantially greater financial, technical, manufacturing and distribution resources than
we have.
Our future uranium production may also compete
with uranium from secondary supplies, including the sale of uranium inventory held by the DoE. At the current time, DoE uranium sales
have been suspended. In addition, there are numerous entities in the market that compete with us for properties and operate in-situ recovery
(“ISR”) facilities.
Western aims to possess a strategic advantage by completing the construction
of its own uranium and vanadium mill during 2029. The Company will have its own mining teams, equipment and infrastructure, which will
dramatically reduce its operational costs and increase margin. Moreover, by using Kinetic Separation, we expect the cost of production
of uranium to be reduced by approximately 40%.
With respect to sales of uranium, the Company
competes primarily based on price. We will market uranium to utilities and commodity brokers. We are in direct competition with supplies
available from various sources worldwide. We believe we compete with multiple operating uranium companies.
With respect to sales of vanadium, the Company
will compete primarily based upon availability and secondarily on price. There will be direct competition with primary production, secondary
production, and co-production from various companies and processors worldwide as individual entities come online or increase production
to address the supply deficit.
ENVIRONMENTAL CONSIDERATIONS AND PERMITTING
United States
Uranium extraction is regulated by the federal
government, states and, in some cases, by Native American tribes. Compliance with such regulation has a material effect on the economics
of our operations and the timing of project development. Our primary regulatory costs have been related to obtaining licenses and permits
from federal and state agencies before the commencement of production activities. The environmental regulatory requirements for the ISR
industry are well established. Many ISR projects have gone a full life cycle without any significant environmental impact. However, the
process can make environmental permitting difficult and timing unpredictable. Western does not plan to utilize an ISR mining process on
its properties.
Mining Permits are disclosed on a per mine basis
in the “Properties” section, below.
Reclamation and Restoration Costs and Bonding
Requirements
At the conclusion of conventional mining, a site
is decommissioned and reclaimed. Reclamation involves removing evidence of surface disturbance. The asset retirement obligations (“ARO”)
of the U.S. mines are subject to legal and regulatory requirements. Estimates of the costs of reclamation are reviewed periodically by
the applicable regulatory authorities. The asset retirement obligation liability represents the Company’s best estimate of the present
value of future reclamation costs in connection with the mineral properties. The Company determined the gross asset retirement obligations
as of December 31, 2024 of the mineral properties to be $1,163,978.
The Company is required by state regulatory agencies
to obtain financial surety relating to certain of its future restoration and reclamation obligations. The Company has provided performance
bonds issued for the benefit of the Company in the amount of $812,993 to satisfy such regulatory requirements as of December 31, 2024.
EMPLOYEES
As of December 31, 2024, we had 32 full-time employees.
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