WESTERN URANIUM & VANADIUM CORP. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

Forward-looking statements



The information disclosed in this quarterly report, and the information
incorporated by reference herein, include "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Forward-looking statements include, but are not limited to, statements
regarding our or our management's expectations, hopes, beliefs, intentions or
strategies regarding the future. In addition, any statements that refer to
projections, forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking
statements. The words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intend," "may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking.



The forward-looking statements contained or incorporated by reference in this
quarterly report are based on our current expectations and beliefs concerning
future developments and their potential effects on us and speak only as of the
date of each such statement. There can be no assurance that future developments
affecting us will be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which are beyond
our control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these
forward-looking statements. These risks and uncertainties include, but are not
limited to, those factors described in this Item 2 of Part I and Item 1A of Part
II of this quarterly report. Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results
may vary in material respects from those projected in these forward-looking
statements. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.



The following discussion should be read in conjunction with our condensed consolidated interim financial statements and accompanying footnotes contained in this quarterly report.


Overview



General



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 reconstituted its board of directors and
senior management team. Effective September 16, 2015, Western completed its
acquisition of Black Range Minerals Limited ("Black Range").



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. 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 status was
changed to "Active" when mining operations were restarted.



On September 16, 2015, Western completed its acquisition of 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.



The Company has registered offices at 330 Bay Street, Suite 1400, Toronto,
Ontario, Canada, M5H 2S8, and its common shares are listed on the CSE under the
symbol "WUC" and are traded on the OTCQX Best Market under the symbol "WSTRF".
Its principal business activity is the acquisition and development of uranium
and vanadium resource properties in the states of Utah and Colorado in the
United States of America ("United States").



                                       17





Recent Developments


Sunday Mining complex project 2021/2022/2023



The SMC project entailed the development of multiple SMC ore bodies and involves
a shift in the base of operations from the St. Jude Mine (2019) to the Sunday
Mine (2021). Underground development began in August 2021 following mine
ventilation, power upgrades, and increasing explosive capabilities. The first
target was the extension of the drift (tunnel) 150 feet to reach the first
surface exploration drill hole to access the GMG Ore Body (GMG). Early results
were positive as drilling toward the GMG resulted in the location of ore-grade
material within thirty feet of the existing mine workings. Notably, only limited
exploration drilling has been done in this area due to the mountainous terrain
on the surface above. As drifting proceeded, very high-grade ore continued to be
intersected through the drift path and on both sides of the drift. As a result,
the team shifted from development to mining. From December 2021 to March 2022,
over 3,000 tons of high-grade uranium/vanadium ore was mined from the drift
based upon on site scintillometer readings. At the end of March 2022, the mining
contractor engaged by Western decided to retire from contract mining operations.
As a result, Western scaled back operations to focus on building an in-house
mining capability.


Subsequently, the Company completed the construction of its internal mining capacity.

Over $1,000,000 was spent on the acquisition, upgrading, and maintenance of a
fleet of used/new mining equipment and vehicles. Additional employees have been
hired for the first mining team and facilities have been upgraded. This first
in-house mining team has been fully outfitted and readied for deployment. The
initial project will focus on additional development of the GMG Ore body. This
will involve ore production and stockpiling of high-grade ore and underground
drilling /exploration to define additional production zones. The next project
will be similar in scope and focus on the St. Jude Mine target areas defined
during the 2019/2020 work project. Mining operations are targeted to restart in
January 2023.


January 2022 Private placement

On January 20, 2022, the Company closed on a non-brokered private placement of
2,495,575 units at a price of CAD $1.60 per unit. The aggregate gross proceeds
raised in the private placement amounted to CAD $3,992,920. Each unit consisted
of one common share of Western plus one common share purchase warrant of
Western. Each warrant entitled the holder to purchase one common share at a
price of CAD $2.50 per share for a period of three years following the closing
date of the private placement. A total of 2,495,575 common shares and 2,495,575
warrants were issued to investors, and 98,985 warrants were issued to broker
dealers in connection with the private placement.



Strategic acquisition of physical uranium



In May 2021, the Company executed a binding agreement to purchase 125,000 pounds
of natural uranium concentrate at approximately $32 per pound. In December 2021,
the Company paid $4,044,083 in connection with its full prepayment of the
purchase price for 125,000 pounds of natural uranium concentrate. This uranium
concentrate was subsequently delivered and sold under the terms of the uranium
supply agreement in the second quarter of 2022.



Uranium Supply Agreement Delivery

In the second quarter of 2022, in satisfaction of the Year 5 delivery under our
supply contract, we delivered and sold 125,000 lbs of uranium concentrate from
our prepaid uranium concentrate inventory. Accordingly, during the nine months
ended September 30, 2022, we recorded revenue of $7,223,609 (at a price of
approximately $57 per pound) and cost of revenue of $4,044,083 related to this
uranium delivery.


Bullen property (Weld County)



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, and Black Range purchased the property in 2008 for its
Keota Uranium Project.



                                       18





In 2017, the Company signed a three year oil and gas lease which in 2020 was
extended for an additional three year term or until the end of continuous
operations. The consideration was in the form of upfront bonus payments and a
backend 3/16th production royalty payment. 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.



A 2019 lawsuit was filed in the Weld County District Court over the original
Bullen Property deed language which was negotiated before the Company acquired
Black Range by prior management and a bank representing the estate of the
property owner. The Company settled with the plaintiffs by awarding the estate's
beneficiaries a non-participating royalty interest of 1/8th for all hydrocarbon
and non-hydrocarbon substances that are produced and sold from the property.



In early 2020, the operator filed an application with the Colorado Oil & Gas
Conservation Commission ("COGCC") to update the permit to create a new pooled
unit. Subsequently, during 2021, the operator advanced through the oil well
production stages: drilling was completed in the first quarter, wellfield
completion/fracking was completed during the second quarter, drill out was
completed in July, and flowback was completed in August. By August 2021, each of
the eight (8) wells had commenced oil and gas production. The first royalty
payment was made in January 2022 and monthly royalty payments have been received
subsequently.



Due to the success of the first 8 wells which were developed in 2021, the
operator decided to develop a second set of 8 wells within Western's royalty
area during 2022. The 2022 well installation was on a timeline which ran
slightly behind the 2021 wells. However, by August 2022, each of the eight (8)
new wells had come online; September 2022 was the new well pad's first full
month of production. The first royalty payment will be made in the first quarter
of 2023.



During the three months ended September 30, 2022 and 2021, we recognized
aggregate revenue of $108,547 and $16,155, respectively, and for the nine months
ended September 30, 2022 and 2021, we recognized aggregate revenue of $387,810
and $48,465, respectively, under these oil and gas lease arrangements. On
January 31, 2022, the operator of the Weld County Colorado oil and gas pooled
trust issued the first cumulative royalty payment in the amount of $207,552 for
August 2021 through December 2021 sales, which was recognized as income in
the
fourth quarter of 2021.



                                       19




Sunday Mine Complex Permit Status

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 was 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 was scheduled to be held during
several monthly MLRB Board meetings, but this matter was delayed several times.
The permit hearing was held during the 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-19 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 Mine Complex 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 12, 2020, a coalition
of environmental groups filed a lawsuit against the MLRB seeking a partial
appeal of the July 22, 2020 decision by requesting termination of the Topaz mine
permit. 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 MLRB 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. Western anticipates receiving an MLRB
board order of reclamation for the Topaz Mine. The Company is continuing to work
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.



Kinetic separation license

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
Complex must be regulated by the CDPHE through a milling license. Beginning in
2017, the Company's regulatory counsel prepared significant documentation in
preparation for a prospective submission. On September 13, 2019, the Company's
regulatory counsel submitted a white paper to the NRC entitled "Recommendations
on the Proper Legal and Policy Interpretation for Using Kinetic Separation
Processes at Uranium Mine Sites." On July 24, 2020, the NRC staff responded with
a letter in support of the original conclusion. Western's regulatory counsel has
proposed alternatives. However, management has decided not to proceed at this
time, given its present opportunity set.



                                       20




Uranium and Nuclear Fuel Section 232 Inquiry Task Force Process



An investigation under Section 232 of the Trade Expansion Act of 1962 was
undertaken by the Department of Commerce in 2018 to assess the impact to
national security of the importation of uranium utilized by civilian nuclear
reactors within the United States. In response to the Section 232 report, the
Trump White House 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 U.S. Department of Energy
(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. 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".
A number of the initiatives have been subsequently implemented. Most recently,
in December 2020, U.S. Congress passed the "COVID-Relief and Omnibus Spending
Bill," which included $75 million for the establishment of a strategic U.S.
Uranium Reserve. In June 2022, the DoE released program guidelines to initiate
purchases of $75 million of domestic uranium inventory which is already in
storage at the Honeywell Metropolis Works uranium conversion facility in
Illinois USA. RFP submissions were due by August 1, 2022, and awards were
expected to be announced within 60 days, but have been delayed several times and
not yet been made public. Western did not hold any qualifying inventory, so
the
Company didn't submit an RFP.


Most notably the results of the Section 232 and NFWG processes provided an
advance warning as to the national security risks of nuclear fuel cycle
dependency upon Russia and its former Soviet republics. With Russia's invasion
of Ukraine, the actual risk level is now understood to be of a greater magnitude
than reported. Further, the cumulative market distortions of competing against
state-sponsored entities for decades has caused countries across the world to
seek government remedies to level the playing field. Any actions taken to remove
pricing distortions from uranium markets are a positive outcome for U.S. uranium
miners.


Vanadium Section 232 Investigation

In the United States, a petition for an investigation under Section 232 of the
Trade Expansion Act of 1962 was requested by two domestic companies in November
2019. In June of 2020, the U.S. Secretary of Commerce, Wilbur Ross, initiated an
investigation into whether the present quantities or circumstances of vanadium
imports into the United States threaten to impair the national security. The
Section 232 National Security Investigation of Imports of Vanadium was
concluded, and a report was submitted to President Biden in February 2021. In
July 2021, the report was made public. It concluded that vanadium imports "do
not threaten to impair the national security as defined in Section 232," but
identified and recommended "several actions that would help to ensure reliable
domestic sources of vanadium and lessen the potential for imports to threaten
national security." No action has been taken on these recommendations.



Initiatives of the Biden-Harris administration



The positive momentum has continued for the nuclear and uranium mining sector
due to the Biden-Harris Administration's emphasis on climate change. Upon taking
office, the Biden team immediately rejoined the Paris Agreement and continued
its pursuit of campaign promises of investments in clean energy, creating jobs,
producing clean electric power, and achieving carbon-free energy in electricity
generation by 2035. Since taking office, President Biden has given all agencies
climate change initiatives. The existing U.S. nuclear reactor fleet currently
produces in excess of 50% of U.S. clean energy, and new, advanced nuclear
technologies promise to generate additional clean energy. In an acknowledgement
of the future growth potential of new nuclear technologies, the Biden-Harris
Administration has increased U.S. government support of the industry to a level
not seen in decades.



                                       21




On August 16, 2022, President Biden signed into law the Inflation Reduction Act
which provisions for $369 billion in climate and energy investments, a portion
of which will significantly benefit the U.S. domestic nuclear industry. Notably,
while protecting the climate, there is a leveling of the playing field with
renewable energy which has long benefited from government support. We see the
benefits to nuclear split across existing reactors, new advanced reactors, low
enriched uranium and high-assay low enriched uranium nuclear fuels, and in
multiple stages of the domestic nuclear fuel cycle. We believe that each of
these benefits increase future aggregate demand for uranium.



The Harris-Biden Administration continues to prioritize climate change
initiatives both in the United States and abroad. President Biden attended both
the (COP26) and (COP27) United Nations Climate Change Conferences. At the most
recent conference, Special Presidential Envoy for Climate John Kerry, proposed a
new initiative for the U.S. to assist and accelerate a European transition from
coal plants to SMRs. This program is ongoing as the Department of Energy is
already advancing this initiative.



Financial purchasers of uranium – Sprott Physical Uranium Trust and ANU Energy OEIC Ltd.

The Sprott Physical Uranium Trust (U.UN) (the "Trust") took over the former
Uranium Participation Corp. (U.TO) and launched an at-the-market program (ATM)
on August 17, 2021 to raise capital for the closed-ended trust. Since the
inception of the ATM program, the Trust has acquired significant quantities of
uranium causing spot prices to increase. In the one year since the Trust
initiated its ATM program in August 2021 it has purchased ~40 million pounds of
uranium and grown the net asset value to ~ $3 billion.



Due to Sprott's success a clone physical uranium fund was launched on May 2022.
The ANU Energy OEIC Ltd fund raised over $75 million dollars in a private
placement and has made its first uranium purchase. Kazatomprom, the world's
largest producer of uranium is a strategic investor and uranium supplier to ANU
Energy. Subsequently, the fund announced that it was contemplating a $500
million IPO in 4Q2022 or 1Q2023.



These dedicated investment vehicles highlight the increasing impact of financial
buyers on uranium markets. Physical uranium purchases by financial buyers are
depleting material from the spot market and sequestering it away from utility
buyers. This has forced a market tightening as inventory levels of the most
mobile inventory have been significantly depleted, initiating a new round of
long-term contracting by utilities.



Russia's Invasion of Ukraine



In February, Russia invaded Ukraine commencing a war between the two countries.
Russia is a major global energy supplier and both countries are top ten uranium
producers, and Russia is a global leader in nuclear fuel services. On the day
prior to the invasion, the spot price of uranium was less than $44/lbs and it
increased to a decade high peak of over $63/lbs, before subsequently settling
around the $50/lbs spot price level.



Russia's invasion of Ukraine has called into question its role and future
participation in the nuclear fuel cycle. However as of today, Rosatom, Russia's
national nuclear company has avoided sanctions due to dependencies that have
been built-up in the industry over decades. However, a desire to stay away from
bad actors and the threat of Russia weaponizing energy exports 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. In the U.S., legislative and agency
solutions are moving forward. This year multiple new nuclear funding programs
have already been put in place and the language from the DoE has only gotten
stronger. The Secretary of Energy recently declared: "The United States wants to
be able to source its own fuel from ourselves and that's why we are developing a
uranium strategy." It has become clear that the DoE is committed to creating
nuclear fuel solutions to address the current dependence and promote a
geopolitical realignment of the nuclear fuel cycle away from Russia.



As a result of these new realities, the U.S. Congress is considering both
sanctions and multiple pieces of legislation focusing on prohibiting the
importation of Russian uranium and nuclear fuel and supporting U.S. domestic
miners and the U.S. nuclear fuel cycle. Most recently, in a show of bipartisan
support, Senators Barrasso, Manchin and Risch merged their competing
legislation, which has been positioned for post-election deliberations.



There remains a possibility that Russia might reverse-sanction the United States
and not make nuclear fuel deliveries. Weaponizing of energy is a tactic that is
already being deployed in the Russia/Ukraine war and is increasingly becoming a
matter of concern from countries that utilize Russian energy. As the U.S. has
the largest fleet of nuclear reactors, any action affecting this market will
have the potential to cause a realignment of global uranium markets.



Nuclear fuel and uranium markets

Western currently is observing positive catalysts across multiple levels of the
nuclear fuel and uranium markets. At a micro-level the projected supply / demand
imbalance is expanding. Demand is increasing with new reactors being built, next
generation reactors being advanced, operating reactor life extensions, restarts
of idle reactors, and nuclear phase-out plans being reversed. There are multiple
data points pointing to a depletion of the secondary supply overhang, which was
prevalent for the last decade. At a macro-level, the electrification transition
and climate change initiatives have increased global support for nuclear.
Further, Russia's invasion of Ukraine and the ensuing global energy crisis has
focused attention on security of supply and supply chain risks. As a result,
Western continues to advance our operational strategy in anticipation of
increasing uranium price levels which will reward the ability to quickly
scale-up ore production.



                                       22





COVID-19


The world has been, and continues to be, impacted by the novel coronavirus
("COVID-19") pandemic. COVID-19, and measures to prevent its spread, impacted
our business in a number of ways. The impact of these disruptions and the extent
of their adverse impact on the Company's financial and operating results will be
dictated by the length of time that such disruptions continue, which will, in
turn, depend on the currently unpredictable duration and severity of the impacts
of COVID-19, and among other things, the impact of governmental actions imposed
in response to COVID-19 and individuals' and companies' risk tolerance regarding
health matters going forward and developing strain mutations. To date, COVID-19
has primarily caused Western delays in reporting, regulatory matters, and
operations. Most notably, the Company initiated a request for Temporary
Cessation status for the Sunday Mine Complex in August 2020 as the mines had not
been restarted within the 180-day window due to the direct and indirect impacts
of the COVID-19 pandemic. The Van 4 Mine reclamation process was delayed because
of COVID-19 pandemic lockdowns. The need to observe quarantine periods also
caused a limited loss of manpower and delay to the 2021 / 2022 Sunday Mine
Complex project. The COVID-19 pandemic has limited Western's participation in
industry and investor conference events. The Company is continuing to monitor
COVID-19 and its subvariants, and the potential impact of the pandemic on the
Company's operations.



Results of Operations



                                             For the Three Months Ended          For the Nine Months Ended
                                                    September 30,                      September 30,
                                                2022               2021            2022              2021
Revenue                                    $      108,547       $   16,155     $   7,611,419     $     48,465
Cost of revenues                                        -                -         4,044,083                -
Gross profit                                      108,547           16,155         3,567,336           48,465

Expenses
Mining expenditures                               204,520          335,028           616,146          422,921
Professional fees                                  97,077          136,174           445,596          287,042
General and administrative                        351,928          361,301         1,870,747          835,281
Consulting fees                                    18,346           12,801            78,165           16,810
Total operating expenses                          671,871          845,304 

3,010,654 1,562,054

Operating profit/(loss)                          (563,324 )       (829,149

) 556,682 (1,513,589 )

Interest expense, net                             (35,799 )          1,344           (17,740 )          4,687
Other (income)/expense                                  -                -            (4,000 )              -
Settlement expense                                      -                -                 -           78,441

Net income/(loss)                                (527,525 )       (830,493 )         578,422       (1,596,717 )

Other Comprehensive income/(loss)
Foreign exchange gain/(loss)                     (148,365 )        (46,363

) (312,492) 23,531

Comprehensive income/(loss)                $     (675,890 )     $ (876,856
)   $     265,930     $ (1,573,186 )



Three months completed September 30, 2022 compared to the three months ended
September 30, 2021


Summary:


Our consolidated net loss for the three months ended September 30, 2022 and 2021
was $527,525 or $0.01 per share and $830,493 or $0.02 per share, respectively.
The principal components of these year over year changes are discussed below.



Our overall loss for the three months ended September 30, 2022 and 2021 was $675,890 and $876,856respectively.


                                       23





Revenue



Our revenue for the three months ended September 30, 2022 and 2021 was $108,547
and $16,155, respectively. The increase in revenue of $92,392 was primarily
related to oil and gas royalties that were paid each month during the current
quarter; payment of production royalties had not yet commenced in the
corresponding quarter in the prior year.



Mining Expenditures



Mining expenditures for the three months ended September 30, 2022 were $204,520
as compared to $335,028 for the three months ended September 30, 2021. The
decrease in mining expenditures of $130,508, or 39% was principally attributable
to a reduction in mining operations during the current quarter while focusing on
building an in-house mining capability; there were active mining operations
during the full corresponding quarter in the prior year.



Professional Fees



Professional fees for the three months ended September 30, 2022 were $97,077 as
compared to $136,174 for the three months ended September 30, 2021. The decrease
in professional fees of $39,097 or 29% was primarily due to a decrease in legal
fees as Securities and Exchange Commission share registration expenditures were
concentrated in the prior period.



General and Administrative



General and administrative expenses for the three months ended September 30,
2022 were $351,928 as compared to $361,301 for the three months ended September
30, 2021. The decrease in general and administrative expense of $9,373 or 3% is
primarily due to a $14,198 decrease in utility bills due to limited mining
operations in the current quarter versus full mining operations during the
corresponding quarter in the prior period.



Consulting Fees


Consulting fees for the three months ended September 30, 2022 were $18,346 as
compared to $12,801 for the three months ended September 30, 2021. The increase
in consulting fees of $5,545 or 43% was principally due to our reduced
utilization of consultants during 2021 due to COVID-19.



Accretion and Interest



Accretion and interest for the three months ended September 30, 2022 produced
income of $35,799 as compared to expense of $1,344 for the three months ended
September 30, 2021. Due to increased capital balances, the Company was afforded
access to a cash program paying higher interest rates which benefitted from both
higher market interest rates and larger cash balances.



Foreign Exchange



Foreign exchange loss for the three months ended September 30, 2022 was $148,365
as compared to a loss of $46,363 for the three months ended September 30, 2021.
The foreign exchange loss is primarily due to the strengthening of the U.S.
dollar relative to the Canadian dollar.



                                       24




Nine month period ended September 30, 2022 compared to the nine months ended
September 30, 2021


Summary:



Our consolidated net income for the nine months ended September 30, 2022 was
$578,422 or $0.01 per share and consolidated net loss was $1,596,717 or $0.04
per share for the nine months ended September 30, 2021. The principal components
of these year over year changes are discussed below.



Our overall result for the nine months ended September 30, 2022 has been
$265,930 and the overall loss was $1,573,186 for the nine months ended
September 30, 2021.


Revenue



Our revenue for the nine months ended September 30, 2022 and 2021 was $7,611,419
and $48,465, respectively. The increase in revenue of $7,562,954 was primarily
related to the revenue recognized upon the satisfaction of the uranium
concentrate delivery under our supply contract whereby we delivered 125,000 lbs
of uranium concentrate from our prepaid uranium concentrate inventory. Further,
oil and gas royalties were recognized during every month during 2022, but $0 of
oil and gas royalties and $48,465 of lease revenue were recognized during the
corresponding nine-month period in the prior year.



Cost of Revenue


Cost of revenue was $4,044,083 for the nine months ended September 30, 2022 as
compared to $0 for the nine months ended September 30, 2021. This increase was a
result of recording the cost of the uranium concentrate that was sold and
delivered during the second quarter of 2022.



Mining Expenditures



Mining expenditures for the nine months ended September 30, 2022 were $616,146
as compared to $422,921 for the nine months ended September 30, 2021. The
increase in mining expenditures of $193,225, or 46% was principally attributable
to increases in the utilization of contract labor, hydrology expenditures, and
mining costs. The Company's Sunday Mine Complex was active more months during
the current period versus the prior period and costs of building an in-house
mining capability were concentrated in the second and third quarters.



Professional Fees



Professional fees for the nine months ended September 30, 2022 were $445,596 as
compared to $287,042 for the nine months ended September 30, 2021. The increase
in professional fees of $158,554 or 55% was primarily due to an increase in
legal expenditures and the reduced utilization of consultants during the prior
year period due to COVID-19.



General and Administrative


General and administrative expenses for the nine months ended September 30, 2022
were $1,870,747 as compared to $835,281 for the nine months ended September 30,
2021. The increase in general and administrative expense of $1,035,446, or 124%
is primarily due to a $744,327 increase in stock-based compensation expense as
the 2021 stock option awards were granted and vested entirely during 2022. There
was also a $122,036 increase in payroll expenses due to an increase in staff and
compensation. Investor relations expenditures increased by $37,190 as investor
initiatives were re-initiated in 2022.



                                       25





Consulting Fees



Consulting fees for the nine months ended September 30, 2022 were $78,165 as
compared to $16,810 for the nine months ended September 30, 2021. The increase
in consulting fees of $61,355 was principally due to our reduced utilization of
consultants during 2021 due to COVID-19.



Accretion and Interest



Accretion and interest for the nine months ended September 30, 2022 produced
income of $17,740 as compared to expense of $4,687 for the nine months ended
September 30, 2021. Due to increased capital balances, the Company was afforded
access to a cash program paying higher interest rates which benefitted from both
higher market interest rates and larger cash balances.



Foreign Exchange



Foreign exchange loss for the nine months ended September 30, 2022 was $312,492
as compared to a gain of $23,531 for the nine months ended September 30, 2021.
The foreign exchange loss is primarily due to the strengthening of the U.S.
dollar relative to the Canadian dollar.



Cash and capital resources

The Company's cash and restricted cash balance as of September 30, 2022 was
$11,220,194. The Company's cash position is highly dependent on its ability to
raise capital through the issuance of debt and equity and its management of
expenditures for mining development and for fulfillment of its public company
reporting responsibilities. Management believes that in order to finance the
development of the mining properties and Kinetic Separation, the Company will be
required to raise additional capital by way of debt and/or equity. Western could
potentially require additional capital if the scope of Company's projects
expands. This outlook is based on the Company's current financial position and
is subject to change if opportunities become available based on current
exploration program results and/or external opportunities.



Net cash provided by (used in) operating activities



Net cash provided by operating activities was $5,174,546 for the nine months
ended September 30, 2022, as compared with $1,576,627 used in operating
activities for the nine months ended September 30, 2021. Of the $5,174,546 in
net cash provided by operating activities for the nine months ended September
30, 2022, $578,422 is derived from our net income before non-cash adjustments.
After non-cash adjustments the cash income increased to $1,378,191. Changes in
our operating assets and liabilities for the period primarily includes a
$4,085,723 decrease in prepaid uranium concentrate inventory and a decrease of
$146,177 in subscription payable.



Net cash used in investing activities



Net cash used in investing activities was $895,400 for the nine months ended
September 30, 2022, as compared with $65,000 for the nine months ended September
30, 2021. This net cash used consists of purchases of equipment and vehicles to
build Western's in-house mining capability.



Net cash provided by financing activities



Net cash provided by financing activities for the nine months ended September
30, 2022 and 2021 were $5,632,273 and $5,519,337, respectively. During the nine
months ended September 30, 2022 we completed a private placement representing
aggregate net proceeds of $3,011,878 and received $2,620,395 from the exercise
of warrants.



                                       26





Reclamation Liability



The Company's mines are subject to certain asset retirement obligations, which
the Company has recorded as reclamation liabilities. The reclamation liabilities
of the United States mines are subject to legal and regulatory requirements, and
estimates of the costs of reclamation are reviewed periodically by the
applicable regulatory authorities. The reclamation 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
reclamation liabilities of the mineral properties to be $751,405 and $740,446 as
of September 30, 2022 and December 31, 2021, respectively. The Company expects
to begin incurring the reclamation liability after 2054 for all mines that are
not in reclamation and accordingly, has discounted the gross liabilities over
their remaining lives using a discount rate of 5.4%. The net discounted
aggregated values as of September 30, 2022 and December 31, 2021 were $297,510
and $271,620, respectively. The gross reclamation liabilities as of September
30, 2022 and December 31, 2021 are secured by financial warranties in the amount
of $751,405 and $740,446, respectively.



On March 2, 2020, the Colorado Mined Land Reclamation Board ("MLRB") issued an
order vacating the Van 4 Temporary Cessation, terminating mining operations and
ordering commencement of final reclamation. The Company has begun the
reclamation of the Van 4 Mine. The reclamation cost is fully covered by the
reclamation bonds posted upon acquisition of the property. The Company adjusted
the fair value of its reclamation obligation for the Van 4 Mine. Reclamation at
the Van 4 Mine has continued using company employees and equipment. The
headframe and ore bins have been dissembled and placed into storage. This phase
followed building removal; hence cement pads are the only structures remaining
onsite. The portion of the reclamation liability related to the Van 4 Mine and
its related restricted cash are included in current liabilities and current
assets, respectively, at a value of $75,057.



Oil and gas lease and easement



The Company entered into an oil and gas lease that became effective with respect
to minerals and mineral rights owned by the Company of approximately 160 surface
acres of the Company's property in Colorado. As consideration for entering into
the lease, the lessee has agreed to pay the Company a royalty from the lessee's
revenue attributed to oil and gas produced, saved, and sold attributable to the
net mineral interest. The Company has also received cash payments from the
lessee related to the easement that the Company is recognizing incrementally
over the eight year term of the easement.



On June 23, 2020, the same entity as discussed above elected to extend the oil
and gas lease easement for three additional years, commencing on the date the
lease would have previously expired. 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.



During the three months ended September 30, 2022 and 2021, the Company
recognized aggregate revenue of $108,547 and $16,155, respectively, and for the
nine months ended September 30, 2022 and 2021, the Company recognized aggregate
revenue of $387,810 and $48,465, respectively, under these oil and gas lease
arrangements. On January 31, 2022, the operator of the Weld County Colorado oil
and gas pooled trust issued the first cumulative royalty payment check in the
amount of $207,552 for August 2021 through December 2021 sales which was
recognized as income in the fourth quarter of 2021. Subsequently, in 2022,
monthly royalty checks were received for sales during each of the months in
the
first quarter.



                                       27





Related Party Transactions


The Company has entered into transactions with related parties pursuant to service agreements in the normal course of business, as follows:

Prior to the acquisition of Black Range, Mr. 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 AUD $500,000 (USD $321,600 as
of September 30, 2022) to Seller within 60 days of the first commercial
application of the Kinetic Separation technology. Western assumed this
contingent payment obligation in connection with the acquisition of Black Range.
At the date of the acquisition of Black Range, this contingent obligation was
determined to be probable. Since the deferred contingent consideration
obligation is probable and the amount is estimable, the Company recorded the
deferred contingent consideration as an assumed liability in the amount of
$321,600 and $362,794 as of September 30, 2022 and December 31, 2021,
respectively.



The Company also had to Mr Glasier reimbursable expenses in the amount of $54,000
and $65,753 of the September 30, 2022 and December 31, 2021respectively.


Going Concern



With the exception of the quarter ending June 30, 2022, we had incurred losses
from our operations. During the three months ended September 30, 2022, we
generated a net loss of $527,525. We expect to generate operating losses for the
foreseeable future as we incur expenses to bring our mining operations online.
As of September 30, 2022, we had an accumulated deficit of $12,583,074 and
working capital of $10,181,380.



Since inception, the Company has met its liquidity requirements principally
through the issuance of notes and the sale of its common shares. On January 20,
2022, the Company closed on a non-brokered private placement of 2,495,575 units
at a price of CAD $1.60 per unit. The aggregate gross proceeds raised in the
private placement amounted to CAD $3,992,920 (USD $3,011,878 in net proceeds).
During the nine months ended September 30, 2022, the Company received $2,620,395
in proceeds from the exercise of warrants.



The Company's ability to continue its operations and to pay its obligations when
they become due is contingent upon the Company obtaining additional financing.
Management's plans include seeking to procure additional funds through debt and
equity financings, to secure regulatory approval to fully utilize its Kinetic
Separation and to initiate the processing of ore to generate operating cash
flows.



There are no assurances that the Company will be able to raise capital on terms
acceptable to the Company or at all, or that cash flows generated from its
operations will be sufficient to meet its current operating costs and required
debt service. If the Company is unable to obtain sufficient amounts of
additional capital, it may be required to reduce the scope of its planned
product development, which could harm its financial condition and operating
results, or it may not be able to continue to fund its ongoing operations. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern to sustain operations for at least one year from the issuance of
the accompanying financial statements. The accompanying condensed consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.



                                       28




Off-balance sheet arrangements

From September 30, 2022, there were no off-balance sheet transactions. The Company has not entered into any specialized financial arrangements to minimize its investment risk, currency risk or commodity risk.

Critical accounting estimates and policies



The preparation of these condensed consolidated financial statements requires
management to make certain estimates, judgments and assumptions that affect the
reported amounts of assets and liabilities at the date of the condensed
consolidated financial statements and reported amounts of expenses during the
reporting period.



Significant assumptions about the future and other sources of estimation
uncertainty that management has made at the end of the reporting period, that
could result in a material adjustment to the carrying amounts of assets and
liabilities, in the event that actual results differ from assumptions made,
include, but are not limited to, the following: fair value of transactions
involving common shares, assessment of the useful life and evaluation for
impairment of intangible assets, valuation and impairment assessments on mineral
properties, deferred contingent consideration, the reclamation liability,
valuation of stock-based compensation, valuation of available-for-sale
securities and valuation of long-term debt, HST and asset retirement
obligations. Other areas requiring estimates include allocations of
expenditures, depletion and amortization of mineral rights and properties

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