Western Uranium & Vanadium Corp. - Quarter Report: 2016 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________to ______________

Commission File Number 000-55626

WESTERN URANIUM CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.  Yes  ☒     No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  ☒     No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐     No  ☒

As of November 17, 2016, 17,875,547 of the registrant’s no par value common shares were outstanding.

WESTERN URANIUM CORPORATION

FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016

TABLE OF CONTENTS

The accompanying notes are in integral part of these condensed consolidated financial statements.

The accompanying notes are in integral part of these condensed consolidated financial statements.

The accompanying notes are in integral part of these condensed consolidated financial statements.

The accompanying notes are in integral part of these condensed consolidated financial statements.

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

NOTE 1 - BUSINESS

Nature of operations

Western Uranium Corporation ("Western” or the “Company") 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”).

The Company has registered offices at 10 King Street East, Suite 700, Toronto, Ontario, Canada, M5C 1C3 and its common shares are listed on the CSE under the symbol "WUC." On April 22, 2016, the Company’s shares of common stock began trading on the OTC Pink, and on May 23, 2016, the Company’s common stock was approved for the commencement of trading on the OTCQX Best Market. Its principal business activity is the acquisition and development of uranium resource properties in the states of Utah and Colorado in the United States of America.

On June 28, 2016, the Company’s registration statement became effective and Western became a U.S. reporting issuer. Thereafter, the Company was approved for Depository Trust Company eligibility through the Depository Trust and Clearing Corporation, which facilitates electronic book-entry delivery, settlement and depository services for shares in the United States.

Note 2 - Liquidity and going concern

The Company has incurred continuing losses from its operations and as of September 30, 2016 the Company has an accumulated deficit of $3,474,151 and a working capital deficit of $804,391.

Since inception, the Company has met its liquidity requirements principally through the issuance of notes and the sale of its shares of common stock.

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 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. These condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Pursuant to the Company’s capital raising objectives, during April and May 2016 the Company raised CAD $791,090 (USD $622,174) in a private placement (see Note 10).

On September 2, 2016 the Company completed a private placement and issued 1,078,458 units at CAD $1.70 (USD $1.32) per unit for total gross proceeds of USD $1,423,618. Each unit consists of one common share of the Company and one warrant at an exercise price of CAD $2.80 which expires five years after the date of issuance. The Company intends to use the net proceeds from this capital raise to pay the costs of the acquisition of Black Range, to fund the development of the Company’s ablation technology, to fund mine production preparation, to pay down certain of the Company’s notes payable, and for working capital purposes (see Note 10).

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

Note 3 - SUMMARY OF Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2015 and related notes thereto which were included in the Company’s form 10-12G filed with the Securities and Exchange Commission on July 22, 2016.

The accompanying unaudited condensed consolidated financial statements include the accounts of Western and its wholly-owned subsidiaries, Western Uranium Corp., Pinon Ridge Mining LLC, Black Range Minerals Limited, 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. and Black Range Development Utah LLC. All significant inter-company transactions and balances have been eliminated upon consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. Significant areas requiring management's estimates and assumptions include determining the fair value of transactions involving shares of common stock, 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 and asset retirement obligations. Other areas requiring estimates include allocations of expenditures, depletion and amortization of mineral rights and properties. Actual results could differ from those estimates.

Foreign Currency Translation

The reporting currency of the Company, including its subsidiaries, is the United States dollar. The financial statements of subsidiaries located outside of the U.S. are measured in their functional currency, which is the local currency. The functional currency of the parent is the Canadian dollar. Monetary assets and liabilities of these subsidiaries are translated at the exchange rates at the balance sheet date. Income and expense items are translated using average monthly exchange rates. Non-monetary assets are translated at their historical exchange rates. Translation adjustments are included in accumulated other comprehensive loss in the condensed consolidated balance sheets.

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Fair Values of Financial Instruments

The fair value of financial instruments in the Company’s consolidated financial statements at September 30, 2016 and December 31, 2015 are as follows:

Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants (using the treasury stock method). The computation of basic loss per share for the three and nine month periods ended September 30, 2016 and 2015 excludes potentially dilutive securities. The computations of net loss per share for each period presented is the same for both basic and fully diluted.

Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive.

Note 4 - RECENT ACCOUNTING PRONOUNCEMENTS

On February 25, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). This update will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The new guidance will also require additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. The provisions of this update are effective for annual and interim periods beginning after December 15, 2018. The Company is currently evaluating the impact the adoption of this ASU will have on the Company’s financial position and results of operations.

On March 30, 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718)”. This update requires that all excess tax benefits and tax deficiencies arising from share-based payment awards should be recognized as income tax expense or benefit on the income statement. The amendment also states that excess tax benefits should be classified along with other income tax cash flows as an operating activity. In addition, an entity can make an entity-wide accounting policy election to either estimate the number of awards expected to vest or account for forfeitures as they occur. The provisions of this update are effective for annual and interim periods beginning after December 15, 2016. The Company is currently evaluating the impact the adoption of this standard will have on its financial statements.

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

Note 4 - RECENT ACCOUNTING PRONOUNCEMENTS, continued

In April 2016, the FASB issued ASU No. 2016-10 “Revenue from Contracts with Customers (Topic 606)”, “Identifying Performance Obligations and Licensing” (“ASU 2016-10”). ASU 2016-10 clarifies the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The provisions of this update are effective for annual and interim periods beginning after December 15, 2017, with early application permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606)”, “Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”). The core principal of ASU 2016-12 is the recognition of revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The provisions of this update are effective for annual and interim periods beginning after December 15, 2017, with early application permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In June 2016 the FASB issued ASU No.2016-13 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments”. ASU No. 2016-13 changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim period beginning after December 15, 2018. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.

In August 2016 the FASB issued ASU No. 2016-15 “Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments”. ASU No. 2016-15 clarifies diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash. The update to the standard is effective for the Company beginning January 1, 2018, with early application permitted. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements.

In October 2016 the FASB issued ASU No, 2016-16 “Income Taxes (Topic 740) – Intra-Entity Transfers of Assets other than Inventory”. ASU No. 2016-16 modifies the current exception to income tax accounting that required companies to defer the income tax effect of certain intercompany transactions. ASU No. 2016-16 only allows companies to defer the income tax effect of intercompany inventory transactions under an exception to the guidance on income taxes that currently applies to intercompany sales and transfers of all assets. The update to the standard is effective for the Company beginning January 1, 2018, with early application permitted as of the beginning of an annual period. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements.

In October 2016 the FASB issued ASU No. 2016-17 “Consolidation (Topic 810) – Interests Held through Related Parties that are under Common Control”. ASU No. 2016-17 changes the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity (“VIE”) and how a reporting entity that is a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The update to the standard is effective for the Company beginning January 1, 2017, with early application permitted. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements.

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

Note 5 - Mineral Assets, Ablation Intellectual Property and Other Property

On August 18, 2014, the Company purchased mining assets in an arm's length transaction. The mining assets include both owned and leased land in the states of Utah and Colorado. All of the mining assets represent properties which have previously been mined to different degrees for uranium. As the Company has not formally established proven or probable reserves on any of its properties, there is greater inherent uncertainty as to whether or not any mineralized material can be economically extracted as originally planned and anticipated.

The Company’s mining properties acquired on August 18, 2014, include: San Rafael Uranium Project located in Emery County, Utah; The Sunday Mine Complex located in western San Miguel County, Colorado; The Van 4 Mine located in western Montrose County, Colorado; The Yellow Cat Project located in eastern Grand County, Utah; The Farmer Girl Mine project located in Montrose County, Colorado; The Sage Mine project located in San Juan County, Utah, and San Miguel County, Colorado.

On September 16, 2015, Western completed its acquisition of Black Range. In connection with the acquisition of Black Range, Western acquired the net assets of Black Range. These net assets consist principally of interests in a complex of uranium mines located in Colorado (the “Hansen-Taylor Complex”) and a 100% interest in a 25 year license for ablation mining technologies and related patents from Ablation Technologies, LLC. The Hansen-Taylor Complex is principally a sandstone-hosted deposit that was discovered in 1977. Ablation is a low cost, purely physical method of sorting uranium ore by applying a grain-size separation process to ore slurries.

During the third quarter of 2016, the Company began to reduce the number of mines it owns that do not meet the Company’s economic requirements for its mining assets. In September 2016, the Company elected not to renew the leases of two mines that were obtained through the acquisition of Black Range. The decision to not renew these two leases was based upon a number of factors, the most significant of which were the location of the mines and the amounts of Vanadium and Uranium within these mines. The forfeiture of these leases has no material adverse impact on the fair value of the Company’s mining assets.

The Company’s mining and mining related assets consist of the following:

On May 26, 2016, the Company executed agreements with the mortgage holder whereby in an equal exchange the mortgage was exchanged for the land, building and improvements with which it was secured (see Note 8).

On June 1, 2016, Black Range entered into an agreement with Ferris-Haggarty Mining Corporation to transfer all available data, information, materials, reports, assay analysis, or other regarding the Ferris-Haggarty Copper Project in Carbon County, WY from 2006 through 2009. In exchange Black Range Minerals Inc. received 100,000 Common Class A Voting shares of Ferris-Haggarty Mining Corporation. The transaction is deemed to lack commercial substance because neither the fair value of the data relinquished nor the fair value of the shares are determinable within reasonable limits, given that there is no market for the data and that the Company does not have enough information to reliably determine a value for the shares. Since the exchange of data for shares of Ferris-Haggarty lacks commercial substance, the value of the exchange will be based on the recorded value of the asset relinquished (the data), which is $0.

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

NOTE 6 - Accounts Payable and Accrued Liabilities

NOTE 7 - Notes Payable

EFHC Note

On August 18, 2014, in connection with the purchase of the mining properties, the Company entered into a note payable with Energy Fuels Holding Corporation (“EFHC”) (the “EFHC Note”) for $500,000. The EFHC Note bears interest at a rate of 3.0% per annum and is secured by a first priority interest in certain of the Company’s mining assets. On the date of the purchase, the Company recorded the EFHC Note net of a discount for interest of $73,971 at a rate of 4% per annum, resulting in a total effective interest rate of 7% per annum. The discount is being amortized using the effective interest method over the life of the loan. All principal on the EFHC Note is due and payable on August 18, 2018 and interest on the EFHC Note is due and payable annually beginning August 18, 2015.

Nueco Note

On August 18, 2014, also in connection with the purchase of the mining properties, the Company entered into a Note Assumption Agreement with EFHC and Nuclear Energy Corporation (“Nueco”), whereby the Company assumed all of the obligations of EFHC under its note payable with Nueco (the “Nueco Note”). The Nueco Note bears no stated interest rate and is secured by certain of the Company’s mining assets. On the date of the purchase, the Company recorded the Nueco Note net of a discount for interest of $23,724 at a rate of 7% per annum. The discount is being amortized using the effective interest method over the life of the loan. The Nueco payment due on December 20, 2014 in the amount of $250,180 was made on January 5, 2015 without penalty other than additional interest at 6% per annum. As of December 31, 2015, the Nueco Note had a remaining obligation outstanding of $250,180, the due date of which was extended to January 13, 2016. In connection with the extension, the Company agreed to add interest from the date of October 13, 2015 until the date paid at the annual rate of one percent (1%) per annum.

On February 8, 2016, the Company and the lender agreed to further extend the maturity of the Nueco Note to June 2016. In consideration for the extension the Company increased the principal amount by 10% (or $25,384), increased the interest rate to 6% per annum and paid a $5,000 fee that did not reduce the interest or principal. On June 20, 2016, the Company further extended the maturity of the Nueco Note to July 31, 2016. In consideration for the extension, the Company paid a $5,000 fee that did not reduce the interest or principal on the Nueco Note.

On August 8, 2016, accrued interest was paid in the amount of $13,477. On August 16, 2016, the Company further extended the maturity of the Nueco Note to November 16, 2016. In consideration for the extension, the Company paid a fee of $10,000 which did not reduce the interest or principal on the Nueco Note. Further, a principal payment of $90,000 was made on August 23, 2016, which reduced the outstanding principal amount to $189,220. The August 16, 2016 extension was accounted for as a modification, and as such, the extension fees were accounted for as additional debt discount and were amortized over the remaining extended term of the note. The maturity payment was not made on November 16, 2016, and thus, as of November 17, 2016, the Nueco Note was, and remains, in default.

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

NOTE 7 - Notes Payable, CONTINUED

Siebels Note

On September 30, 2015 the Company entered into a note payable (“Siebels Note”) with The Siebels Hard Asset Fund, Ltd. (“Siebels”) for $250,000, which was fully funded on October 14, 2015. The Siebels Note bears interest at a rate of 16.0% per annum and was to mature on December 15, 2015. On December 16, 2015 the Company and the lender agreed to extend the maturity of the Siebels Note until June 16, 2016. In consideration for the extension of the repayment, the accrued interest at the time of extension of $8,333 was reclassified to principal, bringing the principal of the Siebels Note to $258,423. Also in consideration for such extension the interest rate was increased to 18% per annum. The Company did not repay the note upon its maturity on June 16, 2016. On July 29, 2016, a partial principal payment in the amount of $100,000 was made and on September 9, 2016, a partial principal payment in the amount of $50,000 was made. After the remittance of the aforementioned principal payments, the balance remaining outstanding as of November 11, 2016 was $108,423. As such, the Siebels Note was in default as of June 2016 and remains in default. Siebels has not made a formal demand for repayment and has verbally agreed to work with the Company to arrange for alternative repayment terms acceptable to both parties.

On February 22, 2016, the Company entered into a second note payable with Siebels for $100,000. The note bore interest at a rate of 18.0% per annum and matured on April 22, 2016. On April 28, 2016, the Company repaid this note in full.

Notes payable consisted of:

During the three months ended September 30, 2016 and 2015, the Company’s interest expense on notes payable was $29,666, and $23,512, respectively, including the amortization of debt discounts. Interest expense on notes payable for the nine months ended September 30, 2016 and 2015 was $112,046 and $68,588, respectively.

NOTE 8 - Mortgage

In connection with the acquisition of Black Range, Western assumed a mortgage secured by land, building and improvements at 1450 North 7 Mile Road, Casper, Wyoming, with interest payable at 8.00% and payable in monthly payments of $11,085 with the final balance of $1,044,015 due as a balloon payment on January 16, 2016. The Company did not make the final balloon payment as scheduled. On May 26, 2016, the Company executed agreements with the mortgage holder whereby in an equal exchange the mortgage was exchanged for the land, building and improvements with which it was secured, and pursuant to which no future financial consideration is required.

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

Note 9 - reclamation liability

The reclamation liabilities of the US 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 at September 30, 2016 and December 31, 2015 of the mineral properties to be approximately $1,036,286 and $1,036,286, respectively. During the three months ended September 30, 2016 and 2015, the accretion of the reclamation liabilities was $3,096 and $2,066, respectively. During the nine months ended September 30, 2016 and 2015, the accretion of the reclamation liabilities was $183,510 and $27,700, respectively. Except in regard to its Alaska coal mine property (as discussed below), The Company expects to begin incurring the reclamation liability after 2054 and accordingly, has discounted the gross liabilities over a thirty year life using a discount rate of 5.4% to a net discounted value as of September 30, 2016 and December 31, 2015 of $403,639 and $220,129, respectively. The gross reclamation liabilities as of September 30, 2016 are secured by certificates of deposit in the amount of $1,036,333. During the second quarter of 2016, the Company initiated actions to cancel its coal mining leases in Alaska. In connection therewith, the Company notified the state of Alaska of its intent to forfeit the posted bond in satisfaction of the reclamation liabilities at the site. In response to the Company’s notification, the Company received notification that the state of Alaska was initiating forfeiture of the Company’s performance bond for reclamation. However, the notice indicated an additional surety bond of $150,000 in excess of the $210,500 cash bond which had been posted by the Company upon purchase of the property. The Company and its advisors do not believe that it is obligated for this additional amount of claimed reclamation obligation.  The Company is working with its legal counsel and the State of Alaska to resolve this matter.   The Company has not recorded an additional $150,000 obligation as the Company does not expect, based on the advice of legal counsel, to be obligated to an amount greater than that presently reflected in the reclamation liability. During the nine months ended September 30, 2016, the Company adjusted the fair value of its reclamation obligation and for the Alaska mine, accreted $174,412 to bring its reclamation liability to face value. The portion of the reclamation liability related to the Alaska mine, and its related restricted cash are included in current liabilities, and current assets, respectively, at a value of $215,976.

Note 10 - share capital and other equity instruments

Private Placements

On January 4, 2016, the Company completed a private placement raising gross proceeds of CAD $300,000 through the subscription for 101,009 common shares at a price of CAD $2.97 (USD $2.14) per common share, and warrants to purchase aggregate of 101,009 common shares at an exercise price of CAD $3.50. This offering closed on December 31, 2015. Of the total amount received, CAD $275,000 (USD $198,298) was received in December of 2015 while the remainder CAD $25,000 (USD $18,236) was received in the three months ended March 31, 2016. The warrants are exercisable immediately upon issuance and expire five years from the date of issuance. As of December 31, 2015, the Company accounted for the proceeds of $198,298 as subscriptions payable.

During April 2016, the Company initiated a private placement offering for the sale of units of its securities for a price per unit of CAD $1.70 (USD $1.34). Each unit consists of one share of the Company’s common stock and one warrant to purchase a share of common stock at CAD $2.60 per share, with a term of five years. During April and May 2016 the Company raised gross proceeds of CAD $791,090 (USD $622,174) through the issuance of 465,347 units.

On September 2, 2016 the Company completed a private placement issuing 1,078,458 units at CAD $1.70 (USD $1.32) per unit for total gross proceeds of USD $1,423,618 and net proceeds of USD $1,407,841. Each unit consists of one common share of the Company and one warrant at an exercise price of CAD $2.80 which expire five years after the date of issuance. The Company used this capital raise to pay the costs of the acquisition of Black Range, to fund the development of the Company’s ablation technology, to fund mine production preparation and for working capital purposes.

During the nine months ended September 30, 2016, the Company issued 1,644,814 shares of common stock in connection with these private placements.

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

Note 10 - share capital and other equity instruments, continued

Incentive Stock Option Plan

The Company maintains an Incentive Stock Option Plan (the “Plan”) that permits the granting of stock options as incentive compensation. Shareholders of the Company approved the Plan on June 30, 2008 and amendments to the Plan on June 20, 2013, and the Board of Directors approved additional changes to the Plan on September 12, 2015.

The purpose of the Plan is to attract, retain and motivate directors, management, staff and consultants by providing them with the opportunity, through stock options, to acquire a proprietary interest in the Company and benefit from its growth.

At both September 30, 2016 and December 31, 2015, a total of 271,996 stock options issued under the Plan were outstanding. All of those options were issued in connection with the Company’s acquisition of Black Range Minerals Limited (“Black Range”) to replace options previously issued by Black Range to its former offers and directors.

The Plan provides that the aggregate number of common shares for which stock options may be granted will not exceed 10% of the issued and outstanding common shares at the time stock options are granted. At December 31, 2015, a total of 16,230,733 common shares were outstanding, and at that date the maximum number of stock options eligible for issue under the Plan was 1,623,073 (10% of the issued and outstanding common shares). At September 30, 2016, a total of 16,797,089 common shares were outstanding, and at that date the maximum number of stock options eligible for issue under the Plan was 1,679,708.

Stock Options Granted

In connection with the acquisition of Black Range, the Board of Directors granted options for the purchase of 271,996 shares of the Company’s common stock to certain of the former directors, employees and consultants of Black Range. On the date of grant, these options were fully vested, had a weighted average exercise price of CAD $6.39 (USD $4.91) and a weighted average remaining contractual life of 3.52 years and had a grant date fair value of $1.59 per share. As of September 30, 2016, these stock options had a remaining contractual life of 2.77 years and had no intrinsic value. These stock options became exercisable on January 17, 2016. Subsequent to the period end the Company issued additional options under the Company’s Incentive Stock Option Plan (See Note 13 – Subsequent Events).

Warrants

As of September 30, 2016, there were warrants outstanding to purchase an aggregate of 1,644,814 shares of the Company’s common stock at an exercise price of CAD $2.79 (USD $2.12) per share. These warrants have a weighted average remaining life of 4.78 years and were fully exercisable on date of grant.

Note 11 - Mining Expenditures

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

NOTE 12 - Related Party Transactions (Including Key Management Compensation)

The Company has transacted with related parties pursuant to service arrangements in the ordinary course of business, as follows:

An entity controlled by a member of the Board of Directors earned consulting fees totaling $9,117 and $22,680 for the three months ended September 30, 2016 and 2015, respectively and $27,350 and $50,037 for the nine months ended September 30, 2016 and 2015, respectively. The same director earned director fees totaling $1,519 and $1,489 during the three months ended September 30, 2016 and 2015, respectively, and $3,093 and $7,747 for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016 and December 31, 2015, the Company has $1,519 and $0, respectively, in accounts payable and accrued liabilities owing to this director.

Pursuant to a consulting agreement, a US limited liability company owned by a person who is a director and until October 19, 2016, was the Company’s CFO, entered into a contract with the Company effective January 1, 2015 (“January 2015 Agreement”) to provide financial and consulting services at an annual consultant fee of $100,000. The contract had a term of one year. On October 21, 2015, the Company entered into an additional agreement with this same company to provide additional services to the Company, for the term of October through December 2015 for a monthly fee of $6,500. On January 1, 2016, the Company entered into an agreement with a different US limited liability company owned by the same director (“January 2016 Agreement”) to provide financial and other consulting services at $8,333 per month. During the three months ended September 30, 2016 and 2015, the Company incurred fees of $25,000 and $25,000, respectively, to these companies. During the nine months ended September 30, 2016 and 2015, the Company incurred fees of $75,000 and $75,000, respectively, to these companies. At September 30, 2016 and December 31, 2015, the Company had $8,333 and $6,500, respectively, included in accounts payable and accrued liabilities payable to these companies. (See Note 13 – Subsequent Events).

In connection with the acquisition of Black Range on September 16, 2015, Western assumed an obligation in the amount of AUS $500,000 payable to Western’s CEO and director contingent upon the commercialization of the ablation technology. As at September 30, 2016, the obligation of $372,000 is included in the condensed consolidated balance sheet. During the three and nine months ended September 30, 2016, the Company recorded a gain of $0 and $128,000 respectively, on the translation of the obligation and such gain, was reflected within the “unrealized foreign exchange gain” in the statement of operations and comprehensive loss.

Pursuant to a consulting agreement, a US limited liability company owned by a person who is a director entered into a consulting contract with the Company effective April 1, 2016 to provide financial, advisory, and consulting services, including representing the Company to a variety of stakeholders for a six month term ending on September 30, 2016. Professional fees for the three and nine months ended September 30, 2016 were $45,000 and $75,000, respectively, related to this agreement.

As of September 30, 2016 and December 31, 2015, the Company had $0 and $0, respectively, included in accounts payable and accrued expenses payable to this entity.

WESTERN URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in $USD)

Unaudited

NOTE 13 - SUBSEQUENT EVENTS

Stock Option Grants

On October 4, 2016, the Company granted an aggregate of 1,075,000 options for the purchase of common shares to ten officers, consultants, directors and employees of the Company under the Company's Incentive Stock Option Plan. The options shall have an exercise price of CAD $2.50 vesting equally commencing initially on the effective date of grant of October 4, 2016 and thereafter on October 31, 2016, and March 31, 2017 with a five-year term from the date of vesting.

Consulting Agreement

Pursuant to a consulting agreement, the January 2016 Agreement was cancelled and a new agreement was entered into between the Company, a US limited liability company owned by the same director as the January 2016 Agreement and Robert Klein (“October 2016 Agreement”) to provide financial operating services and to have Mr. Klein serve as the Chief Financial Officer. The term of the October 2016 Agreement runs through July 31, 2017 and has an annual fee of $162,000 payable monthly, starting on October 1, 2016.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 of this quarterly report and in 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 footnotes thereto contained in this quarterly report.

Overview

General

Western was incorporated in December, 2006 under the Ontario Business Corporations Act. During 2014, the Company acquired 100% of the issued and outstanding shares of Pinon Ridge Mining LLC ("PRM"), a Delaware limited liability company. The transaction constituted a reverse takeover of Western by PRM. After obtaining appropriate shareholder approvals, the Company subsequently reconstituted its Board of Directors and senior management team and changed its name to Western Uranium Corporation.

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 (“ASX”) until the acquisition was completed. Western and Black Range entered into a definitive Merger Implementation Agreement, pursuant to which Western agreed to acquire all of the issued and outstanding shares of Black Range.

Western has registered offices at 700-10 King Street East, Toronto, Ontario, Canada M5C 1C3 and its common shares are listed on the Canadian Securities Exchange (“CSE”) under the symbol "WUC" and trade on the United States OTCQX Best Market under the ticker symbol “WSTRF.” Its principal business activity is the acquisition and development of uranium resource properties principally in the states of Utah and Colorado, in the United States of America.

Recent Developments

December 2015 Private Placement

On January 4, 2016, the Company completed a private placement raising gross proceeds of CAD $300,000 through the subscription for 101,009 common shares at a price of CAD $2.97 (USD $2.14) per common share, and warrants to purchase an aggregate of 101,009 common shares at an exercise price of CAD $3.50. This offering closed on December 31, 2015. Of the total amount received, CAD $275,000 (USD $198,298) was received in December of 2015 while the remainder CAD $25,000 (USD $18,236) was received in the three months ended March 31, 2016. The warrants are exercisable immediately upon issuance and expire five years from the date of issuance. As of December 31, 2015, the Company accounted for the proceeds of $198,298 as subscriptions payable. During the nine months ended September 30, 2016, the Company issued an aggregate of 101,009 shares of common stock in connection with this private placement.

April 2016 Private Placement

During April 2016, the Company initiated a private placement offering for the sale of units of its securities for a price per unit of CAD $1.70 (USD $1.32). Each unit consists of one share of the Company’s common stock and one warrant to purchase a share of common stock at CAD $2.60. The warrants are exercisable immediately upon issuance and expire five years from the date of closing. As of the closing date at May 5, 2016, the Company raised gross proceeds of CAD $791,090 (USD $ 622,174) through the issuance of 465,347 units.

June 2016 Private Placement

During June 2016, the Company commenced a private placement offering. On September 2, 2016 the Company completed the private placement issuing 1,078,458 units at CAD $1.70 (USD $1.32) per unit for total gross proceeds of USD $1,423,618. Each unit consists of one common share of the Company and one warrant at an exercise price of CAD $2.80 which expires five years after the date of issuance. The Company intends to use this capital raise to pay the costs of the acquisition of Black Range, to fund the development of the Company’s ablation technology, to fund mine production preparation and for working capital purposes.

Extension of Short Term Loans

On February 8, 2016, the Company and the lender agreed to further extend the maturity of the Nueco Note to June 2016. In consideration for the extension the Company increased the principal amount by 10% (or $25,384), increased the interest rate to 6% per annum and paid a $5,000 fee that did not reduce the interest or principal. On June 20, 2016, the Company further extended the maturity of the Nueco Note to July 31, 2016. In consideration for the extension, the Company paid a $5,000 fee that did not reduce the interest or principal on the Nueco Note. On August 8, 2016, accrued interest was paid in the amount of $13,477. On August 16, 2016, the Company further extended the maturity of the Nueco Note to November 16, 2016 and in connection therewith paid a $10,000 fee that did not reduce the principal or interest on the note. The August 16, 2016 extension was accounted for as a modification, and as such, the extension fees were accounted for as additional debt discount and were amortized over the remaining extended term of the note. Further, a principal payment of $90,000 was made on August 23, 2016, which reduces the outstanding principal amount due under the Nueco Note to $189,220. The maturity payment was not made on November 16, 2016, and thus, as of November 17, 2016, the Nueco Note was, and remains, in default.

On December 16, 2015 the Company and the lender agreed to extend the maturity of the Siebels Note until June 16, 2016. In consideration for the extension of the repayment, the accrued interest at the time of extension of $8,333 was reclassified to principal, bringing the principal of the Siebels Note to $258,423. Also in consideration for such extension the interest rate was increased to 18% per annum. The Company did not repay the note upon its maturity on June 16, 2016.   On July 29, 2016, a partial principal payment in the amount of $100,000 was made and on September 9, 2016, a partial principal payment in the amount of $50,000 was made. After the remittance of the aforementioned principal payments, the balance remaining outstanding as of November 11, 2016 was $108,423. As such, the Siebels Note was in default as of June 2016 and remains in default. Siebels has not made a formal demand for repayment and has verbally agreed to work with the Company to arrange for alternative repayment terms acceptable to both parties.

Dual Market for Shares in the United States

On May 23, 2016, Western Uranium shares began trading on the OTCQX Best Market under the symbol “WSTRF”.

On June 28, 2016, the Company’s Form 10 registration statement became effective and Western became a U.S. reporting issuer. Thereafter, the Company was approved for DTC eligibility through the Depository Trust and Clearing Corporation (DTCC), which facilitates electronic book-entry delivery, settlement and depository services for shares in the United States. By having established dual trading markets for the Company’s shares in both Canada and the United States, Western now has comprehensive access to the large and sophisticated North American natural resource investor markets.

Sale of Mortgage through Equal Exchange

In connection with the Black Range Transaction, Western assumed a mortgage secured by land, building and improvements at 1450 North 7 Mile Road, Casper, Wyoming, with interest payable at 8.00% and payable in monthly payments of $11,085 with the final balance of $1,044,015 due as a balloon payment on January 16, 2016. The Company did not make the final balloon payment on the mortgage as scheduled; subsequently on May 26, 2016, the Company executed agreements with the mortgage holder whereby the mortgage was exchanged for the land, building and improvements securing the mortgage in an equal exchange. No future financial consideration is required.

Ablation Licensing

Over the months of June and July 2016, Western 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 ablation mining technology within the state of Colorado, if any. During May and June, 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 United States Nuclear Regulatory Commission (“NRC”).  In response, the CDPHE received an unsupported advisory opinion (the “Advisory Opinion”) dated October 16, 2016 with which Western’s regulatory counsel does not agree. NRC’s Advisory Opinion recommends that ablation technology should be regulated as a milling operation. The Advisory Opinion did not address the potential application of ablation technology for the primary purpose of cleanup of abandoned ore stockpiles or mine waste containing uranium. Nevertheless, the Advisory Opinion recognizes that there may be exemptions to certain milling regulatory requirements due to the benign nature of the non-uranium bearing sands produced after ablation is completed on uranium-bearing ores. A final determination will be made by the CDPHE considering the NRC Advisory Opinion, the Colorado public meeting process, and the CDPHE regulatory and evaluation framework. As of November 14, 2016, no determination has been made by the CPDHE.

Letter Of Intent with Pinon Ridge Mill

The Company has entered into a letter of intent with Pinon Ridge Corporation for use of its ablation mining technology at the permitted uranium recovery facilities at the Pinon Ridge Mill site. The letter of intent provides for the processing of all of Western’s ore produced by its mines in the region at the mill site to produce U308 and vanadium utilizing both the application of ablation mining technology and traditional milling techniques, at a cost to be determined in a definitive agreement. The Pinon Ridge Mill license is held by Pinon Ridge Resources Corporation, a wholly owned subsidiary of Pinon Ridge Corporation. The letter of intent is subject to the signing of a definitive agreement between the parties, which is contemplated to be completed on or before March 1, 2017. The Pinon Ridge Mill is permitted, but at the pre-development stage.

Production Timing Factors

The following represents forward-looking information with respect to the commencement of production of uranium and/or vanadium and serves as an update to previously disclosed expectations. Production may commence at a different time than anticipated herein by management. As conditions and expectations change, Western will continue to provide updates on at least a quarterly basis. The timing for commencement of production is uncertain and is dependent upon multiple factors. Among the likely preconditions to Western commencing production are sustained increases in the market price of uranium and/or vanadium. Management believes that the Company is unlikely to commence production until the term price of uranium is approximately $45 per pound (assuming vanadium prices do not independently make production feasible). Currently, Western’s ability to process ore in the short-term is dependent upon the White Mesa Mill, which is located in Blanding, Utah and is not owned by Western. The commencement of production is also dependent upon Western receiving modified mining permits, and the receipt of any necessary governmental approvals, licenses or permits for the application of Western’s existing ablation production unit and ablation technology. Further the raising of sufficient capital is necessary to cover the pre-production and initial production costs.

Western continues to position itself for flexibility with the goal of beginning production as expeditiously as possible once market conditions for production of U308 and/or vanadium are favorable. Even if all such market conditions are favorable, including a term price of uranium of not less than approximately $45 per pound, management anticipates that a minimum lead time of approximately six months would be required to commence production at the Sunday Mine Complex. Production is subject to a permit modification process being initiated, (meaning, for example, that if conditions were favorable and/or the permitting process was initiated by year-end 2016, Western would likely move into production in the third or the fourth quarter of 2017). To commence production, management is currently budgeting for start-up costs of at least $2,000,000, consisting of equipment upgrades of $650,000, overhead costs of $720,000, permitting costs of $100,000, mine preparation costs of $100,000, $200,000 in personnel costs, $100,000 for securing contract mining equipment, $100,000 for exploration drilling, and miscellaneous costs of $30,000. This budget is based on management’s analysis and projections, which have not been verified or confirmed by an independent third-party.

Disposal of Mining Properties

During the third quarter of 2016, the Company began to reduce the number of mines it owns that do not meet the Company’s economic requirements for its mining assets. In September 2016, the Company elected not to renew the leases of two mines that were obtained through the acquisition of Black Range. The decision to not renew these two leases was based upon a number of factors, the most significant of which were the location of the mines and the amounts of Vanadium and Uranium within these mines. The forfeiture of these leases has no material adverse impact on the fair value of the Company’s mining assets.

Canceling Alaska Coal Mine Leases

During the second quarter of 2016, the Company initiated actions to cancel its coal mining leases in Alaska. In connection therewith, the Company notified the state of Alaska of its intent to forfeit the posted bond in satisfaction of the reclamation liabilities at the site. In response to the Company’s notification, the Company received notification that the state of Alaska was initiating forfeiture of the Company’s performance bond for reclamation. However, the notice indicated an additional surety bond of $150,000 in excess of the $210,500 cash bond which had been posted by the Company upon purchase of the property. The Company and its advisors do not believe that it is obligated for this additional amount of claimed reclamation obligation.  The Company is working with its legal counsel and the State of Alaska to resolve this matter.  The Company has not recorded an additional $150,000 obligation as the Company does not expect, based on the advice of legal counsel, to be obligated to an amount greater than that presently reflect in the reclamation liability. During the nine months ended September 30, 2016, the Company adjusted the fair value of its reclamation obligation and for the Alaska mine, accreted $174,412 to bring its reclamation liability to face value. The portion of the reclamation liability related to the Alaska mine, and its related restricted cash are included in current liabilities, and current assets, respectively, at a value of $215,976.

African Ore Update

During the first quarter of 2016, the Company received a shipment of African ore for testing to determine how the ablation process can improve the recovery economics of a large fully developed deposit in Africa. In the second quarter of 2016, the African ore was characterized, logged, ablated and relogged. Subsequently, testing was completed and the results provided on a confidential basis to the owner of the African deposit. The Company has not received any comments back from the owner of the African deposit.

Incentive Stock Option Plan

The Company maintains an Incentive Stock Option Plan (the “Plan”) that permits the granting of stock options as incentive compensation. Shareholders of the Company approved the Plan on June 30, 2008 and amendments to the Plan on June 20, 2013, and the Board of Directors approved additional changes to the Plan on September 12, 2015.

The purpose of the Plan is to attract, retain and motivate directors, management, staff and consultants by providing them with the opportunity, through stock options, to acquire a proprietary interest in the Company and benefit from its growth.

At both September 30, 2016 and December 31, 2015, a total of 271,996 stock options issued under the Plan were outstanding. All of those options were issued in connection with the Company’s acquisition of Black Range Minerals Limited (“Black Range”) to replace options previously issued by Black Range to its former offers and directors.

The Plan provides that the aggregate number of common shares for which stock options may be granted will not exceed 10% of the issued and outstanding common shares at the time stock options are granted. At December 31, 2015, a total of 16,230,733 common shares were outstanding, and at that date the maximum number of stock options eligible for issue under the Plan was 1,623,073 (10% of the issued and outstanding common shares). At September 30, 2016, a total of 16,797,089 common shares were outstanding, and at that date the maximum number of stock options eligible for issue under the Plan was 1,679,708.

In connection with the acquisition of Black Range, the Board of Directors granted options for the purchase of 271,996 shares of the Company’s common stock to certain of the former directors, employees and consultants of Black Range. On the date of grant, these options were fully vested, had a weighted average exercise price of CAD $6.39 (USD $4.91) and a weighted average remaining contractual life of 3.52 years and had a grant date fair value of $1.59 per share. As of September 30, 2016, these stock options had a remaining contractual life of 2.77 years and had no intrinsic value. These stock options became exercisable on January 17, 2016.

Grant of Stock Options

On October 4, 2016, the Company granted an aggregate of 1,075,000 options for the purchase of common shares to ten officers, consultants, directors and employees of the Company under the Company's Incentive Stock Option Plan. The options shall have an exercise price of CAD $2.50 vesting equally commencing initially on the effective date of grant of October 4, 2016 and thereafter on October 31, 2016 and March 31, 2017 with a five-year term from the date of vesting.

Appointment of Chief Financial Officer

On October 19, 2016, Robert Klein was appointed to serve as Chief Financial Officer of the Company, replacing Andrew Wilder. Mr. Wilder will continue to serve as a director of the Company. 

Appointment of Vice President – Operations

On October 24, 2016, Western appointed Michael Rutter as Vice President Operations for the Company. Mr. Rutter has specific experience in the oversight of the construction, mechanics, electrical and operation of the Ablation production units. Previously, Mr. Rutter was superintendent for Energy Fuels’ Utah, Colorado and Arizona uranium production locations.

Results of Operations

Three Months Ended September 30, 2016 as Compared to the Three Months Ended September 30, 2015

Summary

Our consolidated net loss for the three months ended September 30, 2016 and 2015 was $544,171 and $458,974 or $0.03 and $0.04 per share, respectively. The principal components of these quarter over quarter changes are discussed below.

Our comprehensive loss for the three months ended September 30, 2016 and 2015 was $554,906 and $440,527, respectively.

Mining Expenditures

Mining expenditures for the three months ended September 30, 2016 were $119,711 as compared to $210,688 for the three months ended September 30, 2015. The decrease in mining expenditures of $90,977, or 43% was principally attributable to the costs of moving the ablation equipment leading up to the acquisition of Black Range in September of 2015. In 2016, the costs were mainly attributable to the amortization of yearly lease fees and royalty expense for the Boyer and Taylor properties.

Professional Fees

Professional fees for the three months ended September 30, 2016 were $200,734 as compared to $123,763 for the three months ended September 30, 2015. The increase in professional fees of $76,971, or 62% was principally due to $50,000 incurred in advisory board services from our newly appointed advisory board member and an increase of $18,000 in audit and accounting fees due to having to file in the US and Canada.

General and Administrative

General and administrative expenses for the three months ended September 30, 2016 were $103,412 as compared to $51,591 for the three months ended September 30, 2015. The increase in general and administrative expense of $51,821, or 100%, was principally due to an increase in payroll expense of $18,000 upon the hiring of Mr. Siglin as the Company’s VP of Development and an increase in lease expenses of $15,000 due to properties acquired upon the acquisition of Black Range and an increase in expenses of $18,000 due to the travel and other expenses incurred for our annual shareholder meeting.

Consulting Fees

Consulting fees for the three months ended September 30, 2016 were $95,179 as compared to $49,420 for the three months ended September 30, 2015. The increase in consulting fees of $45,759, or 93% was principally related to costs of $45,000 incurred under a consulting agreement with a director to provide financial advisory services.

Accretion and Interest

Accretion and interest expense for the three months ended September 30, 2016 was $25,135 as compared to $23,512 for the three months ended September 30, 2015. The increase of accretion and interest expense of $1,623, or 7% was mainly attributable to the accretion and interest on the note payable to Siebels.

Foreign Exchange

Foreign exchange (loss) gain for the three months ended September 30, 2016 was $(10,735) as compared to $18,447 for the three months ended September 30, 2015. The decrease of the foreign exchange gain of $29,182, or 158% is primarily due to the U.S. Dollar strengthening against the Canadian Dollar.

Nine Months Ended September 30, 2016 as Compared to the Nine Months Ended September 30, 2015

Summary

Our consolidated net loss for the nine months ended September 30, 2016 and 2015 was $1,522,587 and $989,475 or $0.09 and $0.08 per share, respectively. The principal components of these quarter over quarter changes are discussed below.

Our comprehensive loss for the nine months ended September 30, 2016 and 2015 was $1,587,106 and $973,025, respectively.

Mining Expenditures

Mining expenditures for the nine months ended September 30, 2016 were $331,798 as compared to $301,388 for the nine months ended September 30, 2015. The increase in mining expenditures of $30,410, or 10% was principally attributable to an increase of $80,000 related to expense on Black Range properties offset by a decrease in ablation expense of $107,008 as these costs were primarily related to the costs of transporting the ablation equipment in preparation for the acquisition of Black Range.

Professional Fees

Professional fees for the nine months ended September 30, 2016 were $526,826 as compared to $324,529 for the nine months ended September 30, 2015. The increase in professional fees of $202,297, or 62% was principally due to the cost associated with the Company becoming publicly traded in the United States and establishing its DTC eligibility along with $50,000 related to advisory services that did not begin until the third quarter of 2016 when the advisory board was established.

General and Administrative

General and administrative expenses for the nine months ended September 30, 2016 were $277,515 as compared to $169,812 for the nine months ended September 30, 2015. The increase in general and administrative expense of $107,703, or 63% was principally due to an increase in payroll expense of $54,209 upon the hiring of Mr. Siglin as the Company’s VP of Development, an increase of $29,516 in lease expense related to and office and storage property acquired in the acquisition of Black Range in the third quarter of 2015 and an increase of $23,387 in travel expense related to higher activity since the acquisition of Black Range.

Consulting Fees

Consulting fees for the nine months ended September 30, 2016 were $252,048 as compared to $125,158 for the nine months ended September 30, 2015. The increase in consulting fees is $126,890, or 101% was principally related to costs of $120,000 incurred under a consulting agreement with a director for financial consulting services.

Unrealized foreign exchange gain

Unrealized foreign exchange gain for the nine months ended September 30, 2016 was $128,000, which represented a change in the value of the deferred contingent consideration obligation.

Accretion and Interest

Accretion and interest expense for the nine months ended September 30, 2016 was $262,400 as compared to $68,588 for the nine months ended September 30, 2015. The increase of accretion and interest expense of $193,812, or 283% was mainly attributable to the accretion and interest on the note payable to Siebels and the mortgage on the Casper, Wyoming building assumed in connection with the Black Range Transaction. During the second quarter of 2016, the Company canceled certain of its coal mining leases in Alaska. In connection with such cancellation, on July 28, 2016 Alaska notified the Company that its reclamation deposit would be forfeited. On May 17, 2016, the Company accreted $174,412 to accrete its reclamation liability to its fair value.

Foreign Exchange

Foreign exchange (loss) gain for the nine months ended September 30, 2016 was $(64,519) as compared to $16,450 for the nine months ended September 30, 2015. The decrease of the foreign exchange gain of $80,969 was primarily due to the strengthening of the U.S. Dollar against the Canadian Dollar along with an increase in intercurrency transactions.

Liquidity and Capital Resources

The Company’s cash balance as of September 30, 2016 was $474,681. 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 reporting responsibilities. The Company expects to require additional capital in order to continue the development of the ablation mining technology. Management believes that in order to finance the development of the mining properties, the Company will be required to raise significant additional capital by way of debt and/or equity. 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.

On January 4, 2016, the Company completed a private placement raising gross proceeds of CAD $300,000 through the subscription for 101,009 common shares at a price of CAD $2.97 (USD $2.14) per common share, and warrants to purchase aggregate of 101,009 common shares at an exercise price of CAD $3.50. Of the total amount received, CAD $275,000 (USD $198,298) was received in December of 2015 while the remainder CAD $25,000 (USD $18,236) was received in February of 2016. The warrants are exercisable immediately upon issuance and expire five years from the date of issuance. As of December 31, 2015, the Company accounted for the proceeds of $198,298 as subscriptions payable. During the nine months ended September 30, 2016 the Company issued an aggregate of 101,009 shares of common stock in connection with this private placement.

During April 2016, the Company initiated a private placement for the sale of units of its securities for a price per unit of CAD $1.70 (USD $1.32). Each unit consists of one share of the Company’s common stock and one warrant to purchase a share of common stock at CAD $2.60. The warrants are exercisable immediately upon issuance and expire five years from the date of issuance. During April and May 2016 the Company raised gross proceeds of CAD $791,090 (USD $ 622,174) through the issuance of 465,347 units.

On September 2, 2016 the Company completed a private placement selling 1,078,458 units at CAD $1.70 (USD $1.32) per unit for total gross proceeds of USD $1,423,618. Each unit consists of one common share of the Company and one warrant at an exercise price of CAD $2.80 which expire five years after the date of issuance. The Company intends to use this capital raise to pay the costs of the acquisition of Black Range, to fund the development of the Company’s ablation technology, to fund mine production preparation, to pay down certain of the Company’s notes payable, and for working capital purposes.

Net cash used in operating activities

Net cash used in operating activities was $1,483,533 for the nine months ended September 30, 2016, as compared with net cash used of $871,036 for the nine months ended September 30, 2015. The increase of $612,497 in net cash used is mainly due to the Company having an increased net loss of $533,112 in 2016.

Net cash used in investing activities

Net cash used in investing activities was $0 for the nine months ended September 30, 2016, as compared to $380,694 for the nine months ended September 30, 2015. The cash used in investing activities in 2015 consisted primarily of the advance to Black Range under the credit facility.

Net cash provided by financing activities

Net cash provided by financing activities for the nine months ended September 30, 2016 was $1,808,251 as compared to $1,100,447 for the nine months ended September 30, 2015. For 2016, the cash provided by financing activities consisted principally of the proceeds from the issuance of 1,644,814 common shares for $2,048,251 and the proceeds of $100,000 from the Siebels promissory note, off-set by the principal payments on the Siebels and Nueco notes. The financing activities in 2015 were related to the sales of common stock in the February 2015 private placement for an aggregate of 640,000 shares valued at $1,353,793, offset by the payment of the Nueco Note of $253,346.

Reclamation Liability

The reclamation liabilities of the US 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 at September 30, 2016 and December 31, 2015 of the mineral properties to be approximately $1,036,286 and $1,036,286, respectively. During the three months ended September 30, 2016 and 2015, the accretion of the reclamation liabilities was $3,096 and $2,066, respectively. During the nine months ended September 30, 2016 and 2015, the accretion of the reclamation liabilities was $183,510 and $27,700, respectively. Except in regard to its Alaska coal mine property (as discussed below), The Company expects to begin incurring the reclamation liability after 2054 and accordingly, has discounted the gross liabilities over a thirty year life using a discount rate of 5.4% to a net discounted value as of September 30, 2016 and December 31, 2015 of $403,639 and $220,129, respectively. The gross reclamation liabilities as of September 30, 2016 are secured by certificates of deposit in the amount of $1,036,333. During the second quarter of 2016, the Company initiated actions to cancel its coal mining leases in Alaska. In connection therewith, the Company notified the state of Alaska of its intent to forfeit the posted bond in satisfaction of the reclamation liabilities at the site. In response to the Company’s notification, the Company received notification that the state of Alaska was initiating forfeiture of the Company’s performance bond for reclamation. However, the notice indicated an additional surety bond of $150,000 in excess of the $210,500 cash bond which had been posted by the Company upon purchase of the property. The Company and its advisors do not believe that it is obligated for this additional amount of claimed reclamation obligation.  The Company is working with its legal counsel and the State of Alaska to resolve this matter.   The Company has not recorded an additional $150,000 obligation as the Company does not expect, based on the advice of legal counsel, to be obligated to an amount greater than that presently reflect in the reclamation liability. During the nine months ended September 30, 2016, the Company adjusted the fair value of its reclamation obligation and for the Alaska mine, accreted $174,412 to bring its reclamation liability to face value. The portion of the reclamation liability related to the Alaska mine, and its related restricted cash are included in current liabilities, and current assets, respectively, at a value of $215,976.

Related Party Transactions (including key management compensation)

The Company has transacted with related parties pursuant to service arrangements in the ordinary course of business, as follows:

An entity controlled by a member of the Board of Directors earned consulting fees totaling $9,117 and $22,680 for the three months ended September 30, 2016 and 2015, respectively and $27,350 and $50,037 for the nine months ended September 30, 2016 and 2015, respectively. The same director earned director fees totaling $1,519 and $1,489 during the three months ended September 30, 2016 and 2015, respectively, and $3,093 and $7,747 for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016 and December 31, 2015, the Company has $1,519 and $0, respectively, in accounts payable and accrued liabilities owing to this director.

Pursuant to a consulting agreement, a US limited liability company owned by a person who is a director (and the Company’s CFO until October 19, 2016) entered into a contract with the Company effective January 1, 2015 (“January 2015 Agreement”) to provide financial and consulting services at an annual consultant fee of $100,000. The contract had a term of one year. On October 21, 2015, the Company entered into an additional agreement with this same company to provide additional services to the Company, for the term of October through December 2015 for a monthly fee of $6,500. On January 1, 2016, the Company entered into an agreement with a different US limited liability company owned by the same director (“January 2016 Agreement”) to provide financial and other consulting services at $8,333 per month. During the three months ended September 30, 2016 and 2015, the Company incurred fees of $25,000 and $25,000, respectively, to these companies. During the nine months ended September 30, 2016 and 2015, the Company incurred fees of $75,000 and $75,000, respectively, to these companies. At September 30, 2016 and December 31, 2015, the Company had $8,333 and $6,500, respectively, included in accounts payable and accrued liabilities payable to these companies.

Pursuant to a consulting agreement, the January 2016 Agreement was cancelled and a new agreement was entered into between the Company, a US limited liability company owned by the same director as the January 2016 Agreement and Mr. Klein (“October 2016 Agreement”) to provide financial operating services and to have Mr. Klein serve as the Chief Financial Officer. The term of the October 2016 Agreement runs through July 31, 2017, may be extended by the parties, and has an annual fee of $162,000 payable monthly, starting on October 1, 2016.

In connection with the acquisition of Black Range on September 16, 2015, Western assumed an obligation in the amount of (AUD) $500,000 (USD $372,000) payable to Western’s CEO and director contingent upon the commercialization of the ablation technology.

Pursuant to a consulting agreement, a US limited liability company owned by a person who is a director entered into a consulting contract with the Company effective April 1, 2016 to provide financial, advisory, and consulting services, representing the company to a variety of stakeholders for a six month term ending on September 30, 2016. Professional fees for the three and nine months ended September 30, 2016 were $45,000 and $75,000, respectively, under this agreement. As of September 30, 2016 and December 31, 2015, the Company had $0 and $0, respectively, included in accounts payable and accrued expenses payable to this entity.

Going Concern

The accompanying condensed consolidated financial statements have been prepared using United States Generally Accepted Accounting Principles (“US GAAP”) applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern. In this circumstance, the Company would be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying consolidated financial statements. Such adjustments could be material.

The Company has a working capital deficit of $804,391 as of September 30, 2016 and has incurred net losses for the nine months ended September 30, 2016 and September 30, 2015 of $1,522,587 and $989,475, respectively. The Company will require additional financing in order to pursue its business plans and discharge its liabilities as they come due. These conditions indicate the existence of material uncertainties that cast substantial doubt upon the Company's ability to continue as a going concern.

Off Balance Sheet Arrangements

As at September 30, 2016, there were no off-balance sheet transactions. The Company has not entered into any specialized financial agreements 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 shares of common stock, 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.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on their evaluation of our disclosure controls and procedures, our principal executive officer and principal financial officer, with the participation of the Company’s management, concluded that our disclosure controls and procedures were not effective as of June 30, 2016, to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow for timely decisions regarding required disclosure.

Description of Material Weakness

Management has concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2016, due to the lack of segregations of duties and the failure to report disclosures on a timely basis.

Remediation of Material Weakness

Management has developed a plan and related timeline for the Company to design a set of control procedures and the related required documentation thereof in order to address this material weakness. Management has targeted to have the necessary controls in place by the end of 2016.

Changes in Internal Control over Financial Reporting

On October 19, 2016, Andrew Wilder resigned as the Chief Financial Officer of Western Uranium Corporation. Robert Klein was appointed to serve as the Chief Financial Officer of the Company.

There have been no other changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during the current fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

In the opinion of management, we are not involved in any claims, legal actions or regulatory proceedings as of September 30, 2016, the ultimate disposition of which would have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed under “Risk Factors” in our Form 10 (Amendment No. 2) as filed with the Securities and Exchange Commission on July 22, 2016. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by any forward-looking statements contained in this report.

Item 4. Mine Safety Disclosures

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States, and that is subject to regulation by the Federal Mine Safety and Health Administration under the Mine Safety and Health Act of 1977 (“Mine Safety Act”), are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. As Western Uranium does not operate any coal or other mines, no such disclosure is required.

Item 6. Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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