U.S. SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-F
(Check One)
[ ] Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934
or
[X] Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2014
Commission file number 1-35075
WESTERN COPPER AND GOLD CORPORATION
(Exact name of registrant as specified in its charter)
British Columbia, Canada | 1000 | 98-0496216 |
(Province or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer |
incorporation or organization) | Classification Code Number (if | Identification Number (if |
applicable)) | Applicable)) |
18th floor 570 Granville
Street
Vancouver, British Columbia V6C 3P1
Canada
(604) 684-9497
(Address and Telephone Number of
Registrants Principal Executive Offices)
DL Services Inc.
701 Fifth Avenue, Suite 6100
Seattle, Washington 98104
(206) 903-5448
(Name, Address (Including Zip Code) and Telephone
Number
(Including Area Code) of Agent For Service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class | Name of each exchange on which registered |
Common Shares, no par value | NYSE MKT |
ecurities registered or to be registered pursuant to Section 12(g) of the Act. None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None
For annual reports, indicate by check mark the information filed with this Form:
[X] Annual Information Form | [X] Audited Annual Financial Statements |
Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report: 94,194,936
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act
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
requirements for the past 90 days.
Yes [X] 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 (s.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 [ ]
FORM 40-F
PRINCIPAL DOCUMENTS
The following documents, filed as Exhibits 99.1 through 99.3 hereto, are hereby incorporated by reference into this Annual Report on Form 40-F of Western Copper and Gold Corporation (the Company or the Registrant):
(a) |
Annual Information Form for the fiscal year ended December 31, 2014; | |
(b) |
Managements Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2014; and | |
(c) |
Audited Consolidated Financial Statements for the fiscal years ended December 31, 2014 and 2013. | |
The Companys Audited Consolidated Financial Statements included in this Annual Report on Form 40-F have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board. Therefore, they are not comparable in all respects to financial statements of United States companies that are prepared in accordance with United States generally accepted accounting principles. |
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ADDITIONAL DISCLOSURE
Resource and Reserve Estimates
The Companys Annual Information Form for the fiscal year ended December 31, 2014, which is attached hereto as Exhibit 99.1, has been prepared in accordance with the requirements of the securities laws in effect in Canada as of December 31, 2014, which differ in certain material respects from the disclosure requirements of United States securities laws. The terms mineral reserve, proven mineral reserve and probable mineral reserve are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) and the Canadian Institute of Mining, Metallurgy and Petroleum (the CIM) - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. The definitions of these terms differ from the definitions of such terms for purposes of the disclosure requirements of the Securities and Exchange Commission (the Commission) and contained in Industry Guide 7 of the Commission. Under Industry Guide 7 standards, a final or bankable feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms mineral resource, measured mineral resource, indicated mineral resource and inferred mineral resource are defined in NI 43-101 and required by NI 43-101 to be used for disclosure of mineral resources. These terms, however, are not defined terms under Industry Guide 7 and are not permitted to be used in reports and registration statements of United States companies filed with the Commission. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. Inferred mineral resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of contained ounces in a resource is permitted disclosure under Canadian regulations. In contrast, the Commission only permits U.S. companies to report mineralization that does not constitute reserves by Commission standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained and incorporated by reference into this Annual Report on Form 40-F that describes the Companys mineral deposits may not be comparable to similar information made public by issuers subject to the Commissions reporting and disclosure requirements applicable to domestic United States issuers.
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Certifications and Disclosure Regarding Controls and Procedures.
(a) |
Certifications. See Exhibits 99.4, 99.5, 99.6 and 99.7 to this Annual Report on Form 40-F. |
(b) |
Disclosure Controls and Procedures. As of the end of the Companys fiscal year ended December 31, 2014, an evaluation of the effectiveness of the Companys disclosure controls and procedures was carried out by the Companys management with the participation of the Chief Executive Officer and Chief Financial Officer, who are the principal executive officer and principal financial officer of the Company, respectively. Based upon that evaluation, the Companys Chief Executive Officer and Chief Financial Officer have concluded that as of the end of that fiscal year, the Companys disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Commission rules and forms and (ii) accumulated and communicated to the Companys management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. |
(c) |
Managements Annual Report on Internal Control Over Financial Reporting. |
The required disclosure is included in the Managements Report on Internal Control Over Financial Reporting that accompanies the Companys Consolidated Financial Statements for the fiscal year ended December 31, 2014, filed as Exhibit 99.3 to this Annual Report on Form 40-F.
(d) |
Attestation Report of the Registered Public Accounting Firm. |
This Annual Report on Form 40-F does not include an attestation report of the Companys registered public accounting firm due a transition period established by the Jumpstart Our Business Startups Act of 2012 and transition rules established by rules of the Commission for newly public companies.
(e) |
Changes in Internal Control Over Financial Reporting. |
The required disclosure is included in the Managements Report on Internal Control Over Financial Reporting that accompanies the Companys Consolidated Financial Statements for the fiscal year ended December 31, 2014, filed as Exhibit 99.3 to this Annual Report on Form 40-F.
Notices Pursuant to Regulation BTR.
None.
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Identification of the Audit Committee.
The Companys board of directors has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the audit committee are: Robert Gayton, David Williams, and Klaus Zeitler. The board of directors has determined that each member of the audit committee is independent within the meaning of Section 803(A) of the NYSE MKT Company Guide and financially sophisticated within the meaning of Section 803(B) of the NYSE MKT Company Guide.
Audit Committee Financial Expert.
The Companys board of directors has determined that Robert Gayton, a member of its audit committee, qualifies as an audit committee financial expert (as such term is defined in Form 40-F).
Code of Ethics.
The Company has adopted a code of business conduct (the Code) that meets the requirements for a code of ethics within the meaning of Form 40-F and that applies to all of the Companys officers, directors and employees, including, without limitation, its principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. The Code is available for viewing on the Companys website, which may be accessed at www.westerncopperandgold.com.
During the fiscal year ended December 31, 2014, there was no amendment to the Code or waiver, including an implicit waiver, from any provision of the Code.
If any amendment to the Code is made, or if any waiver from the provisions thereof is granted, the Company may elect to disclose the information about such amendment or waiver required by Form 40-F to be disclosed, by posting such disclosure on the Companys website, which may be accessed at www.westerncopperandgold.com.
Principal Accountant Fees and Services.
The required disclosure is included under the heading Additional InformationAudit Committee InformationExternal auditor service fees (by category) in the Companys Annual Information Form for the fiscal year ended December 31, 2014, filed as Exhibit 99.1 to this Annual Report on Form 40-F.
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Pre-Approval Policies and Procedures.
(a) |
All audit, audit related, tax and non-audit services to be performed by PricewaterhouseCoopers LLP, the Companys external auditor, are pre-approved by the audit committee of the Companys board of directors. Before approval is given, the audit committee examines the independence of the external auditor in relation to the services to be provided and assesses the reasonableness of the fees to be charged for such services. |
(b) |
Of the fees reported under the heading Additional InformationAudit Committee InformationExternal auditor service fees (by category) in the Companys Annual Information Form for the fiscal year ended December 31, 2014, filed as Exhibit 99.1 to this Annual Report on Form 40-F, none of the fees billed by PricewaterhouseCoopers LLP were approved by the audit committee of the Companys board of directors pursuant to the de minimis exception provided by Section (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
Off-Balance Sheet Arrangements.
The Company does not have any off-balance sheet arrangements.
Tabular Disclosure of Contractual Obligations.
($ Canadian) | Payment due by period | ||||||
Contractual Obligations | Total | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter |
Office Lease | 334,000 | 222,000 | 112,000 | - | - | - | - |
Mine Safety Disclosure.
Not applicable.
NYSE MKT Statement of Governance Differences.
As a Canadian corporation listed on the NYSE MKT, the Company is not required to comply with most of the NYSE MKT corporate governance standards, so long as the Company complies with Canadian corporate governance practices. In order to claim such an exemption, however, Section 110 of the NYSE MKT Company Guide requires that the Company provide to NYSE MKT written certification from independent Canadian counsel that the non-complying practice is not prohibited by Canadian law. In addition, the Company must disclose the significant differences between its corporate governance practices and those required to be followed by U.S. domestic issuers under the NYSE MKTs corporate governance standards.
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The Company has included a description of such significant differences in corporate governance practices on its website: www.westerncopperandgold.com. In addition, the Company has included a description of such significant differences below:
Shareholder Meeting Quorum Requirement: The NYSE MKT minimum quorum requirement for a shareholder meeting is one-third of the outstanding common shares. In addition, a company listed on NYSE MKT is required to state its quorum requirement in its bylaws. The Companys quorum requirement is set forth in its Articles and bylaws. A quorum for a meeting of shareholders of the Company is one person of the outstanding common shares present or represented by proxy.
Shareholder Approval Requirement: The Company will follow Toronto Stock Exchange rules for shareholder approval of new issuances of its common shares. Following Toronto Stock Exchange rules, shareholder approval is required for certain issuances of shares that: (i) materially affect control of the Company; or (ii) provide consideration to insiders in aggregate of 10% or greater of the market capitalization of the listed issuer and have not been negotiated at arms length. Shareholder approval is also required, pursuant to Toronto Stock Exchange rules, in the case of private placements: (i) for an aggregate number of listed securities issuable greater than 25% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis, prior to the date of closing of the transaction if the price per security is less than the market price; or (ii) that during any six month period are to insiders for listed securities or options, rights or other entitlements to listed securities greater than 10% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis, prior to the date of the closing of the first private placement to an insider during the six month period.
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UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
A. |
Undertaking. |
The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.
B. |
Consent to Service of Process. |
The Company has previously filed a Form F-X in connection with the class of securities in relation to which the obligation to file this report arises.
Any change to the name or address of the agent for service of process of the Company shall be communicated promptly to the Commission by an amendment to the Form F-X referencing the file number of the relevant registration statement.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 27, 2015.
Western Copper and Gold Corporation
By: | /s/ Julien François |
Name: | Julien François |
Title: | Chief Financial Officer |
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EXHIBIT INDEX
WESTERN COPPER AND GOLD CORPORATION
ANNUAL INFORMATION FORM
For the year ended
December 31, 2014
1800 570 Granville Street
Vancouver, British Columbia
V6C 3P1
Dated: March 27, 2015
TABLE OF CONTENTS
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PRELIMINARY NOTES
This document is the Annual Information Form (the AIF) of Western Copper and Gold Corporation for the year ended December 31, 2014. Unless the context indicates otherwise, references in this AIF to Western, the Company or we include all subsidiaries of Western Copper and Gold Corporation. All information contained herein is as at December 31, 2014 unless otherwise stated.
Financial Statements
All financial
information in this AIF is prepared in accordance with International Financial
Reporting Standards (IFRS).
This AIF should be read in conjunction with the Companys audited annual consolidated financial statements and notes thereto, as well as with the managements discussion and analysis for the year ended December 31, 2014. The financial statements and managements discussion and analysis are available at www.westerncopperandgold.com, under the Companys profile on the SEDAR website at www.sedar.com, and under the Companys profile on the EDGAR website at www.sec.gov/edgar.shtml.
Currency
All sums of money which are referred
to in this AIF are expressed in lawful money of Canada, unless otherwise
specified.
Disclosure of Mineral Resources
Disclosure
about our exploration properties in this AIF uses the terms Mineral Resources,
Measured Mineral Resources, Indicated Mineral Resources and Inferred
Mineral Resources, which are Canadian geological and mining terms as defined in
accordance with National Instrument 43-101, standards of disclosure for mineral
projects of the Canadian Securities Administrators, set out in the Canadian
Institute of Mining (CIM) Standards. All disclosure about our exploration
properties conforms to the standards of U.S. Securities and Exchange Commission
Industry Guide 7, Description of Property by Issuers Engaged or to be Engaged
in Significant Mining Operations, other than disclosure of Mineral
Resources, Measured Mineral Resources, Indicated Mineral Resources and
Inferred Mineral Resources which are discussed below.
Cautionary Note to U.S. Investors concerning estimates of
Measured Mineral
Resources and Indicated Mineral Resources
This AIF may use the terms Measured Mineral Resource and Indicated Mineral Resource. We advise U.S. investors that while such terms are recognized and permitted under Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of the Mineral Resources in these categories will ever be converted into Mineral Reserves.
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Cautionary Note to U.S. Investors concerning estimates of
Inferred Mineral
Resources
This AIF may use the term Inferred Mineral Resources. We advise U.S. investors that while such term is recognized and permitted under Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. Inferred Mineral Resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that any part or all of an Inferred Mineral Resource exists, or is economically or legally mineable.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this AIF and the documents incorporated by reference herein that are not historical facts are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements with respect to the future price of metals; the estimation of mineral reserves and resources, the realization of mineral reserve estimates; the timing and amount of any estimated future production, costs of production, and capital expenditures; project schedules; the Companys proposed plan for its properties; recommended work programs; costs and timing of the development of new deposits; success of exploration and permitting activities; permitting timelines, including timing of the Quartz Mining License; currency fluctuations; requirements for additional capital; government regulation of mineral exploration or mining operations; environmental risks; unanticipated reclamation expenses; title disputes or claims; limitations on insurance coverage; and the timing and possible outcome of potential litigation. In certain cases, forward-looking statements can be identified by the use of words such as plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, or believes, or variations of such words and phrases or state that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. Such statements are included, among other places, in this AIF under the headings Development of the Business, Risk Factors and Mineral Properties and in the documents incorporated by reference herein.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Western to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and other factors include, among others, risks related to the integration of acquisitions; risks related to operations; risks related to the feasibility study and the possibility that future exploration and development will not be consistent with the Company's expectations; risks related to joint venture operations; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of metals; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the sections entitled Risk Factors in this AIF.
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Although Western has attempted to identify important factors that could affect it and may cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Forward-looking statements may prove to be inaccurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Western does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events unless required by applicable securities law.
The material factors or assumptions used to develop forward-looking statements include prevailing and projected market prices and foreign exchange rates, exploitation and exploration estimates and results, continued availability of capital and financing, availability of equipment and personnel for required operations, the Company not experiencing unforeseen delays, unexpected geological or other effects, equipment failures, permitting delays, and general economic, market or business conditions and as more specifically disclosed throughout this document. Assumptions relating to the mineral resource and reserve estimates, development, and future economic benefit reported in respect of the Casino Project are discussed in the 2013 Feasibility Study (as defined herein). Forward-looking statements and other information contained herein concerning mineral exploration and our general expectations concerning mineral exploration are based on estimates prepared by us using data from publicly available industry sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which we believe to be reasonable. The industries involve risks and uncertainties and are subject to change based on various factors.
CORPORATE STRUCTURE
Name, Address, and Incorporation
Western
Copper Corporation was incorporated under the Business Corporations Act
(British Columbia) on March 18, 2006. It changed its name to Western Copper and
Gold Corporation on October 17, 2011.
The Companys head office is located at 18th floor 570 Granville Street, Vancouver, BC V6C 3P1. Its registered office address is 10th floor, 595 Howe Street, Vancouver, BC V6C 2T5.
On October 17, 2011, Western Copper Corporation (Western Copper) completed a plan of arrangement (the Arrangement) involving Western Copper, its shareholders and subsidiaries. The Arrangement involved, among other things: (i) a series of vertical short form amalgamations involving Western Copper and its wholly-owned subsidiaries to form the Company, (ii) a name change to Western Copper and Gold Corporation, (iii) amendments to the Company's authorized capital resulting in an unlimited number of common shares and preferred shares, and (iv) certain exchanges of securities resulting in post-Arrangement common shares of the Company, common shares of Copper North Mining Corp. (Copper North) and common shares of NorthIsle Copper and Gold Inc. (NorthIsle) being distributed to shareholders of the Company in exchange for their pre-Arrangement common shares of Western Copper.
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Intercorporate Relationships
The Company has the following subsidiaries:
GENERAL DEVELOPMENT OF THE BUSINESS
On February 9, 2011, the Companys shares began trading on the NYSE MKT under the symbol: WRN. On October 17, 2011, Western Copper completed the Arrangement. Pursuant to the Arrangement, Western Copper transferred the Carmacks Copper Project, the Redstone Project, and $2 million in cash to Copper North and the Island Copper property and $2.5 million in cash to NorthIsle in consideration for common shares of each respective company. Western Copper then changed its name to Western Copper and Gold Corp. and distributed the common shares of Copper North and NorthIsle to Westerns shareholders.
On December 21, 2012, Western completed a royalty sale with 8248567 Canada Limited (the Purchaser), an arms length party, whereby the Purchaser cancelled its 5% net profits interest royalty in the Casino Project and paid Western US$32 million in exchange for a 2.75% net smelter returns royalty in the Casino Project. Other corporate developments are described throughout this AIF.
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DESCRIPTION OF THE BUSINESS
General
Western and its wholly-owned
subsidiary Casino Mining Corp., are focused on advancing the Casino project
(Casino or Casino Project) towards production. The Casino Project is located
in Yukon, Canada and hosts one of the largest undeveloped copper-gold deposits
in Canada. The Company completed a feasibility study on the Casino Project in
January 2013 and completed the first step in the permitting process by
submitting the Casino Project Proposal to the Yukon Environmental and
Socioeconomic Assessment Board (YESAB) in January 2014.
The Company does not have any producing properties and consequently has no current operating income or cash flow. Western is an exploration stage company and has not generated any revenues to date. Commercially viable mineral deposits may not exist on any of the Companys properties.
Trends
Other than noted above, we are not
aware of any trends, uncertainties, demands, commitments or events that are
reasonably likely to have a material effect on our operations, liquidity or
capital resources, or that would cause reported financial information to not
necessarily be indicative of our financial condition.
RISK FACTORS
The following is a brief description of those distinctive or special characteristics of the Company's operations and industry, which may have a material impact on, or constitute risk factors in respect of the Company's financial performance, business and operations.
History of Net Losses; Uncertainty of Additional Financing; Negative Operating Cash Flow
The Company has received no revenue to date from the exploration activities on its properties and has negative cash flow from operating activities. The Company incurred the following losses: (i) $1,365,516 for the year ended December 31, 2013 and (ii) $1,911,974 for the year ended December 31, 2014. As of December 31, 2014, the Company had an accumulated deficit of $89,364,392. In the event the Company undertakes development activity on any of its properties, there is no certainty that the Company will produce revenue, operate profitably or provide a return on investment in the future.
The business of mining and exploration involves a high degree of risk and there can be no assurance that current exploration and development programs will result in profitable mining operations. The Company has no source of revenue, and has significant cash requirements to meet its exploration and development commitments, to fund administrative overhead and to maintain its mineral interests. The Company will need to raise sufficient funds to meet these obligations as well as fund ongoing exploration, advance detailed engineering, and provide for capital costs of building its mining facilities.
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Mineral Exploration and Development Activities Inherently Risky
The business of exploration for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into mineral deposits with significant value. Unusual or unexpected ground conditions, geological formation pressures, fires, power outages, labour disruptions, flooding, earthquakes, explorations, cave-ins, landslides and the inability to obtain suitable machinery, equipment or labour are other risks involved in the operation of mines and the conduct of exploration programs. Substantial expenditures are required to establish ore reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. No assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis. The economics of developing copper, gold and other mineral properties is affected by many factors including the cost of operations, variations in the grade of ore mined, fluctuations in metal markets, costs of processing equipment and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection. The remoteness and restrictions on access of certain of the properties in which the Company has an interest could have an adverse effect on profitability in that infrastructure costs would be higher.
In addition, previous mining operations may have caused environmental damage at certain of the Company's properties. It may be difficult or impossible to assess the extent to which such damage was caused by the Company or by the activities of previous operators, in which case, any indemnities and exemptions from liability may be ineffective.
Uncertainty of Mineral Resources and Mineral Reserves
The figures for Mineral Resources and Mineral Reserves with respect to the Casino Project disclosed in this AIF are estimates and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized. Market fluctuations and the prices of metals may render Resources and Reserves uneconomic. Moreover, short-term operating factors relating to the mineral deposits, such as the need for orderly development of the deposits or the processing of new or different grades of ore, may cause any mining operation to be unprofitable in any particular accounting period. Additionally, estimates may change over time as new information becomes available. If the Company encounters mineralization or geological formations different from those predicted by past drilling, sampling and interpretations, any estimates may need to be altered in a way that could adversely affect the Company's operations or proposed operations.
Possible Loss of Interests in Exploration Properties; Possible Failure to Obtain Applicable Licenses
The agreements pursuant to which the Company acquired its interests in certain of its properties provide that the Company must make a series of payments in cash and/or common shares over certain time periods, expend certain minimum amounts on the exploration of the properties, or contribute its share of ongoing expenditures. If the Company fails to make such payments or expenditures in a timely fashion, the Company may lose its interest in those properties. Further, even if the Company does complete exploration activities, it may not be able to obtain the necessary licenses or permits to conduct mining operations on the properties, and thus would realize no benefit from its exploration activities on the properties. There is no assurance that further applications will be successful.
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Title Risks
Although title to its mineral properties and surface rights has been reviewed by or on behalf of the Company, no assurances can be given that there are no title defects affecting such properties. Title insurance generally is not available for mining claims in Canada, and the Company's ability to ensure that it has obtained secure claim to individual mineral properties may be severely constrained. The Company has not conducted surveys of all of the claims in which it holds direct or indirect interests; therefore, the precise area and location of such properties may be in doubt. Accordingly, the properties may be subject to prior unregistered liens, agreements, transfers or claims, and title may be affected by, among other things, undetected defects. In addition, the Company may be unable to conduct work on the properties as permitted or to enforce its rights with respect to its properties.
Risks Associated with Joint Venture Agreements
In the event that any of the Company's properties become subject to a joint venture, the existence or occurrence of one or more of the following circumstances and events could have a material adverse impact on the Company's profitability or the viability of its interests held through joint ventures, which could have a material adverse impact on the Company's business prospects, results of operations and financial condition: (i) disagreements with joint venture partners on how to conduct exploration; (ii) inability of joint venture partners to meet their obligations to the joint venture or third parties; and (iii) disputes or litigation between joint venture partners regarding budgets, development activities, reporting requirements and other joint venture matters.
Risks Relating to Statutory and Regulatory Compliance
The current and future operations of the Company, from exploration through development activities and commercial production, if any, are and will be governed by applicable laws and regulations governing mineral claims acquisition, prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in exploration activities and in the development and operation of mines and related facilities, generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. The Company has received all necessary permits for the exploration work it is presently conducting; however, there can be no assurance that all permits which the Company may require for future exploration, construction of mining facilities and conduct of mining operations, if any, will be obtainable on reasonable terms or on a timely basis, or that such laws and regulations would not have an adverse effect on any project which the Company may undertake.
Failure to comply with applicable laws, regulations and permits may result in enforcement actions thereunder, including the forfeiture of claims, orders issued by regulatory or judicial authorities requiring operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or costly remedial actions. The Company may be required to compensate those suffering loss or damage by reason of its mineral exploration activities and may have civil or criminal fines or penalties imposed for violations of such laws, regulations and permits. The Company is not currently covered by any form of environmental liability insurance. See Insurance Risk, below.
Existing and possible future laws, regulations and permits governing operations and activities of exploration companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or require abandonment or delays in exploration.
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Environmental Laws and Regulations That May Increase Costs and Restrict Operations
All of the Company's exploration and potential development and production activities are subject to regulation by Canadian governmental agencies under various environmental laws. To the extent that the Company conducts exploration activities or new mining activities in other countries, it will also be subject to the laws and regulations of those jurisdictions, including environmental laws and regulations. These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Environmental legislation in many countries is evolving and the trend has been towards stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and increasing responsibility for companies and their officers, directors and employees. Compliance with environmental laws and regulations may require significant capital outlays on our behalf and may cause material changes or delays in the Company's intended activities. Future changes in these laws or regulations could have a significant adverse impact on some portion of the Company's business, causing it to re-evaluate those activities at that time.
Costs of Land Reclamation
It is difficult to determine the exact amounts that will be required to complete all land reclamation activities in connection with the properties in which the Company holds an interest. Reclamation bonds and other forms of financial assurance represent only a portion of the total amount of money that will be spent on reclamation activities over the life of a mine. Accordingly, it may be necessary to revise planned expenditures and operating plans in order to fund reclamation activities. Such costs may have a material adverse impact upon the financial condition and results of operations of the Company. There is a potential future liability for cleanup of tailings deposited on the mining license areas during previous periods of mining and reprocessing. It is not possible to quantify at this time what the potential liability may be and detailed assessments need to be made to determine future land reclamation costs, if any, due to this potential liability.
Assets in remote locations
The costs, timing and complexities of mine construction and development are increased by the remote location of the Company's mineral projects. It is common in new mining operations to experience unexpected problems and delays during development, construction and mine start-up. In addition, delays in the commencement of mineral production often occur. Accordingly, there are no assurances that the Company's activities will result in profitable mining operations or that the Company will successfully establish mining operations or profitably produce metals at any of its properties. Climate change or prolonged periods of inclement weather may severely limit the length of time in which exploration programs and development activities may be undertaken.
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Infrastructure
Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power sources and water supply are important determinants, which affect capital and operating costs. The lack of availability on acceptable terms or the delay in the availability of any one or more of these items could prevent or delay exploitation and or development of the Company's properties. If adequate infrastructure is not available in a timely manner, there can be no assurance that the exploitation and or development of the Company's properties will be commenced or completed on a timely basis, if at all; that the resulting operations will achieve the anticipated production volume; or that the construction costs and ongoing operating costs associated with the exploitation and or development of the Company's properties will not be higher than anticipated. In addition, unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect the Company's operations and profitability.
High Metal Prices Increasing the Demand For, and Cost Of, Exploration, Development and Construction Services and Equipment
The strength of metal prices over the past several years has encouraged increases in mining exploration, development and construction activities around the world, which has resulted in increased demand for, and cost of, exploration, development and construction services and equipment. The costs of such services and equipment may continue to increase if current trends continue. Increased demand for services and equipment could result in delays if services or equipment cannot be obtained in a timely manner due to an inadequate availability, and may cause scheduling difficulties due to the need to coordinate the availability of services or equipment, any of which could materially increase project exploration, development and/or construction costs.
First Nations
Consultation with First Nations groups is required of the Company in the environmental assessment, subsequent permitting, development, and operation stages of its proposed projects. Certain First Nations groups may oppose certain proposed projects at any given stage and such opposition may adversely affect the project(s) in question, the Company's public image, or the Company's share performance.
Canadian law related to aboriginal rights, including aboriginal title rights, is in a period of change. There is a risk that future changes to the law may adversely affect the Company's rights to its Canadian projects.
Price Fluctuations: Share Price Volatility
In recent years, the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly those considered exploration stage companies, including the Company, have experienced wide fluctuations which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. From January 1, 2014 to December 31, 2014, the price of the Companys shares has ranged from $0.54 and $1.10 on the TSX. There can be no assurance that continual and significant fluctuations in the price of the common shares of the Company will not occur.
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Changes in the Market Price of Common Shares may be Unrelated to its Results of Operations and Could Have an Adverse Impact on the Company
The Company's common shares are listed on the TSX and the NYSE MKT. The price of the Company's common shares is likely to be significantly affected by short-term changes in copper and gold prices or in its financial condition or results of operations. Other factors unrelated to the Company's performance that may have an effect on the price of the Company's shares include the following: a reduction in analytical coverage by investment banks with research capabilities; a drop in trading volume and general market interest in the Company's securities may adversely affect an investors' ability to liquidate an investment and consequently an investor's interest in acquiring a significant stake in the Company; a failure to meet the reporting and other obligations under relevant securities laws or imposed by applicable stock exchanges could result in a delisting of the Company's common shares and a substantial decline in the price of the common shares that persists for a significant period of time.
As a result of any of these factors, the market price of the Company's common shares at any given point in time may not accurately reflect their long-term value. Securities class action litigation often has been brought against companies following periods of volatility in the market price of their securities. The Company may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management's attention and resources.
Metal Price Volatility
Factors beyond the control of the Company may affect the marketability of any ore or minerals discovered at and extracted from the Company's properties. Resource prices have fluctuated widely, particularly in recent years, and are affected by numerous factors beyond the Company's control including international economic and political trends, inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and increased production due to new and improved extraction and production methods. The effect of these factors cannot accurately be predicted.
The price of each of copper and gold has a history of extreme volatility. The price of the Company's common shares and the Company's financial results may be significantly adversely affected by a decline in the price of copper or gold. The price of each of copper and gold fluctuates widely, especially in recent years, and is affected by numerous factors beyond the Company's control such as the sale or purchase of gold by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, by-product production levels from base-metal mines, and the political and economic conditions of major copper and gold-producing countries throughout the world.
During the 2014 calendar year, the price of gold approximately ranged between US$1,150 per ounce and US$1,400 per ounce. Some factors that affect the price of gold include: industrial and jewelry demand; central bank lending or purchases or sales of gold bullion; forward or short sales of gold by producers and speculators; future level of gold production; and rapid short-term changes in supply and demand due to speculative or hedging activities by producers, individuals or funds. Gold prices are also affected by macroeconomic factors including: confidence in the global monetary system; expectations of the future rate of inflation; the availability and attractiveness of alternative investment vehicles; the general level of interest rates; the strength of, and confidence in, the U.S. dollar, the currency in which the price of gold is generally quoted, and other major currencies; global political or economic events; and costs of production of other gold producing companies whose costs are denominated in currencies other than the U.S. dollar. All of the above factors can, through their interaction, affect the price of gold by increasing or decreasing the demand for or supply of gold.
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During the 2014 calendar year, the price of copper on the London Metal Exchange (LME) ranged from about US$2.90 per pound to approximately US$3.25 per pound. In 2015, the copper price on the LME dropped below US$2.50 per pound. Some factors that affect the price of copper include: industrial demand; forward or short sales of copper by producers and speculators; future level of copper production; and rapid short-term changes in supply and demand due to speculative or hedging activities by producers, individuals or funds. Copper prices are also affected by macroeconomic factors including: confidence in the global economy; expectations of the future rate of inflation; the availability and attractiveness of alternative investment vehicles; the strength of, and confidence in, the U.S. dollar, the currency in which the price of copper is generally quoted, and other major currencies; global political or economic events; and costs of production of other copper producing companies whose costs are denominated in currencies other than the U.S. dollar. All of the above factors can, through their interaction, affect the price of copper by increasing or decreasing the demand for or supply of copper.
Currency Fluctuations May Affect the Costs of Doing Business
The Company's activities and offices are currently located in Canada. Copper and gold are sold in international markets at prices denominated in U.S. dollars. However, some of the costs associated with the Company's activities in Canada may be denominated in currencies not directly related to the price of the U.S. dollar. Any appreciation of these currencies vis-à-vis the U.S. dollar could increase the Company's cost of doing business in these countries. In addition, the U.S. dollar is subject to fluctuation in value vis-à-vis the Canadian dollar. The Company does not utilize hedging programs to any degree to mitigate the effect of currency movements.
Future issuances of securities will dilute shareholder interests
Issuances of additional securities including, but not limited to, common stock pursuant to any financing and otherwise, could result in a substantial dilution of the equity interests of our shareholders.
Dependence on Management
The success of the operations and activities of the Company is dependent to a significant extent on the efforts and abilities of its management team. See Directors and Officers in this AIF for details of the Company's current management. Investors must be willing to rely to a significant extent on their discretion and judgment. The Company does not maintain key employee insurance on any of its employees. The Company depends on key personnel and cannot provide assurance that it will be able to retain such personnel. Failure to retain such key personnel could have a material adverse effect on the Company's business and financial condition.
Competition
Significant and increasing competition exists for mineral deposits in each of the jurisdictions in which the Company conducts operations. As a result of this competition, much of which is with large established mining companies with substantially greater financial and technical resources than the Company, the Company may be unable to acquire additional attractive mining claims or financing on terms it considers acceptable. The Company also competes with other mining companies in the recruitment and retention of qualified directors, officers and employees.
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Conflicts of Interest
The Company's directors and officers may serve as directors or officers of other resource companies or have significant shareholdings in other resource companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the event that such a conflict of interest arises at a meeting of the Company's directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms in accordance with the Business Corporations Act (British Columbia). From time to time several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, permitting involvement in a greater number of programs and reducing financial exposure in respect of any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment. In accordance with the laws of British Columbia, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company. In determining whether or not the Company will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at that time. For a detailed list of roles played by directors and officers in other companies, see Directors and Officers in this AIF.
Effecting Service of Process on the Company's Directors
Since certain of the Company's directors live outside of Canada, it may not be possible to effect service of process on them and since all or a substantial portion of their assets are located outside Canada, there may be difficulties in enforcing judgments against them obtained in Canadian courts.
Insurance Risk
The mining industry is subject to significant risks that could result in damage to or destruction of property and facilities, personal injury or death, environmental damage and pollution, delays in production, expropriation of assets and loss of title to mining claims. No assurance can be given that insurance to cover the risks to which the Company's activities are subject will be available at all or at commercially reasonable premiums. The Company currently maintains insurance within ranges of coverage that it believes to be consistent with industry practice for companies at a similar stage of development. The Company carries liability insurance with respect to its mineral exploration operations, but is not currently covered by any form of environmental liability insurance, since insurance against environmental risks (including liability for pollution) or other hazards resulting from exploration and development activities is unavailable or prohibitively expensive. The payment of any such liabilities would reduce the funds available to the Company. If the Company is unable to fully fund the cost of remedying an environmental problem, it might be required to suspend operations or enter into costly interim compliance measures pending completion of a permanent remedy.
Increased Costs and Compliance Risks as a Result of Being a Public Company
Legal, accounting and other expenses associated with public company reporting requirements have increased significantly in the past few years. The Company anticipates that costs may continue to increase with corporate governance related requirements, including, without limitation, requirements under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, National Instrument 52-110 Audit Committees, and National Instrument 58-101 Disclosure of Corporate Governance Practices.
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The Company also expects these rules and regulations may make it more difficult and more expensive for it to obtain director and officer liability insurance, and it may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for the Company to attract and retain qualified individuals to serve on its board of directors or as executive officers.
We expect to be a passive foreign investment company for the current taxable year, which would likely result in materially adverse U.S. federal income tax consequences for shareholders who are U.S. persons.
We generally will be a passive foreign investment company (a PFIC) under the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, as amended (the Code), if (a) 75% or more of our gross income is passive income (generally, dividends, interest, rents, royalties, and gains from the disposition of assets producing passive income) in any taxable year, or (b) if at least 50% or more of the quarterly average value of our assets produce, or are held for the production of, passive income in any taxable year. A shareholder who is a U.S. person (as such term is defined in the Code) should be aware that we believe that we were a PFIC during one or more prior taxable years, and based on current business plans and financial projections, we expect to be a PFIC for the current taxable year and for the foreseeable future. If we are a PFIC for any taxable year during which a U.S. person holds common shares of the Company, it would likely result in materially adverse U.S. federal income tax consequences for such U.S. person, including, but not limited to, any gain from the sale of our common shares would be taxed as ordinary income, as opposed to capital gain, and such gain and certain distributions on our common shares would be subject to an interest charge, except in certain circumstances. It may be possible for U.S. persons to fully or partially mitigate such tax consequences by making a qualified electing fund election, as defined in the Code (a QEF Election). We currently intend to make available to shareholders who are U.S. persons, upon their written request: (a) information as to our status as a PFIC, and (b) for each year in which we are a PFIC, all information and documentation that a shareholder making a QEF Election with respect to us is required to obtain for U.S. federal income tax purposes. However, there is no assurance that the Company will satisfy the record keeping requirements that apply to a PFIC, or that the Company will continue to supply shareholders with the information that the shareholder is required to report under the rules applicable to making a QEF Election. Therefore, if the Company is a PFIC in any taxable year, there is no assurance that the shareholder will be able to make a QEF Election in respect of the Company's common shares. The PFIC rules are extremely complex. A U.S. person holding the Company's common shares is encouraged to consult its own tax advisor regarding the PFIC rules and the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares.
Capital Costs
The Company prepares budgets and estimates of cash costs and capital costs for its operations. Despite the Companys best efforts to budget and estimate such costs, the costs required by the Companys projects may be significantly higher than anticipated. The Companys actual costs may vary from estimates for a variety of reasons, including: short-term operating factors; risk and hazards associated with mining; natural phenomena, such as inclement weather conditions and unexpected labour shortages or strikes. Operational costs may also be affected by a variety of factors, including: ore grade metallurgy, labour costs, the cost of commodities, general inflationary pressures and currency exchange rates. Many of these factors are beyond the Companys control. Failure to achieve estimates or material increases in costs could have an adverse impact on the Companys business, results of operations and financial condition. Furthermore, delays in mining projects or other technical difficulties may result in even further capital expenditures being required. Any delays or costs overruns or operational difficulties could have a material adverse effect on the Companys business, results of operations and financial condition.
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Funding Risk
The Companys ability to effectively implement its business and operation plans in the future, to take advantage of opportunities for acquisitions, joint ventures or other business opportunities and to meet any unanticipated liabilities of expenses which the Company may incur may depend in part on its ability to raise additional funds. The Company may seek to raise further funds through equity or debt financings, joint ventures, production sharing arrangements or other means. Failure to obtain sufficient financing for the Companys activities and future projects may result in delay and indefinite postponement of exploration, development or production on the properties. There can be no assurance that additional financing will be available when needed or, if available, the terms of the financing might not be favourable to the Company and might involve substantial dilution to shareholders.
MINERAL PROPERTIES
Casino Project (Yukon, Canada)
The Casino Project is a material property for the purposes of National Instrument 43-101. The following is the summary from the technical report entitled Casino Project, Form 43-101F1 Technical Report Feasibility Study, Yukon, Canada Revision 1 (the 2013 Feasibility Study) dated January 25, 2013 and prepared by Conrad E. Huss, P. E., Thomas L. Drielick, P.E., Jeff Austin, P. Eng., Gary Giroux, P. Eng., Scott Casselman, P.Geo. Graham Greenaway, P. Eng., Michael G. Hester, FAus IMM, and Jesse Duke, P. Geo.; each of whom is a qualified person pursuant to National Instrument 43-101. The 2013 Feasibility Study is incorporated by reference in this AIF.
The complete 2013 Feasibility Study may be viewed under our profile at www.sedar.com or on our website at www.westerncopperandgold.com.
1 |
Summary |
This report has been prepared by M3 Engineering & Technology Corporation (M3) of Tucson, Arizona to summarize the work performed in the preparation of a feasibility study, supplementary to the Canadian Standard NI 43-101, previously issued for the development of the Casino property (the Property) in the Yukon Territory in northern Canada for Casino Mining Corporation (CMC), a 100% owned subsidiary of Western Copper and Gold Corporation (WCGC).
1.1 |
Key Data |
The key details about this project are as follows:
1. |
Casino is primarily a copper and gold project that is expected to process 120,000 dry tonnes of material per day (t/d) or 43.8 million dry tonnes per year (t/y). Metals to be recovered are copper, gold, molybdenum and silver. |
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2. |
There are a total of 965 million tonnes of proven and probable mill ore reserves and 157 million tonnes of proven and probable heap leach reserves. Based on the economic analysis, the Property will produce the following over the life of the mine from heap leach and flotation: |
a. |
Gold 5.72 million ounces | |
b. |
Silver 30.26 million ounces | |
c. |
Copper 3.58 billion pounds | |
d. |
Molybdenum 325 million pounds |
3. |
The process will include a conventional single-line SAG mill circuit (Semi-Autogenous Ball Mill Crushing, or SABC) followed by conventional flotation to produce concentrate for sale. In addition to the concentrator, there will be a separate carbon-in-column facility to recover precious metals from oxide ore. Gold and silver bullion (doré) produced will be shipped by truck to metal refineries. |
4. |
The Property will require the construction of a power plant and will generate its own electrical power using LNG to fuel the generator drivers. Additionally, the mine haulage vehicles and over-the-highway tractors which haul concentrates and LNG will utilize LNG as fuel. |
5. |
The Property has several routes of access, including by the Yukon River, by aircraft, winter roads, and existing trails. A network of paved highways provides access to the region from the Port of Skagway, Whitehorse and northern British Columbia. Paved roads to the Property currently exist up to Carmacks. A new, all weather, gravel road will be constructed by the project to connect Casino to Carmacks via the existing Freegold Road. The new access road will, in general, follow the existing Casino Trail that will be upgraded to support trucking from Carmacks to Casino. |
6. |
Fresh water will be sourced from the Yukon River. |
7. |
The major milestones in the schedule are as follows: |
a. |
Full Notice to Proceed and construction start-up first quarter 2016 | |
b. |
Heap Leach operation start-up fourth quarter 2017 | |
c. |
Mill operation start-up fourth quarter 2019 | |
d. |
Commercial Production first quarter 2020 |
1.2 |
Property Description and Ownership |
The Casino porphyry copper-gold-molybdenum deposit is located at latitude 62° 44'N and longitude 138° 50'W (NTS map sheet 115J/10), in west central Yukon, in the northwest trending Dawson Range mountains, 300 km northwest of the territorial capital of Whitehorse.
The area around Casino has been subject to increasing staking and exploration activity over the past few years. Two properties have defined reserves, the Carmacks Copper Project and the Minto Mine, both of which are discussed in Section 23, Adjacent Properties.
The project is located on Crown land administered by the Yukon Government and is within the Selkirk First Nation traditional territory and the Trondek Hwechin First Nation traditional territory lies to the north. The proposed access road crosses into Little Salmon Carmacks First Nation traditional territory to the south.
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The Casino Property lies within the Whitehorse Mining District and consists of 723 full and partial Quartz Claims and 85 Placer Leases acquired in accordance with the Yukon Quartz Mining Act. The total area covered by Casino Quartz Claims is 13,339.17 ha. The total area covered by Casino Placer Leases is 747.45 ha. CMC is the registered owner of all claims, although certain portions of the Casino property remain subject to royalty agreements. The claims covering the Casino property are discussed further in Section 4 of this document.
Figure 1-1 at the end of this section shows the sites location in Yukon Territory as well as other points of interest relevant to this Report. Figure 1-2 and Figure 1-3 show the roadway paths from the Yukon River to the proposed site facilities.
1.3 |
Geology |
The geology of the Casino deposit is typical of many porphyry copper deposits. The deposit is centered on an Upper Cretaceous-age (72-74 Ma), east-west elongated porphyry stock, the Patton Porphyry, which intrudes Mesozoic granitoids of the Dawson Range Batholith and Paleozoic schists and gneisses of the Yukon Crystalline Complex. Intrusion of the Patton Porphyry into the older rocks caused brecciation of both the intrusive and the surrounding country rocks along the northern, southern and eastern contact of the stock. Brecciation is best developed in the eastern end of the stock where the breccia can be up to 400 metres wide in plan view. To the west, along the north and south contact, the breccias narrow gradually to less than 100 metres. The overall dimensions of the intrusive complex are approximately 1.8 by 1.0 kilometres.
The main body of the Patton Porphyry is a relatively small, locally mineralized, stock measuring approximately 300 by 800 metres and is surrounded by a potassically-altered Intrusion Breccia in contact with rocks of the Dawson Range. Elsewhere, the Patton Porphyry forms discontinuous dikes ranging from less than one to tens of metres wide, cutting both the Patton Porphyry Plug and the Dawson Range Batholith. The overall composition of the Patton Porphyry is rhyodacite, with phenocrysts falling into a dacite composition and the matrix being of quartz latite composition. It is more commonly made up of distinct phenocrysts of abundant plagioclase and lesser biotite, hornblende, quartz and opaques.
The Intrusion Breccia surrounding the main Patton Porphyry body consists of granodiorite, diorite, and metamorphic fragments in a fine-grained Patton Porphyry matrix. It may have formed along the margins, in part, by the stoping of blocks of wall rocks. An abundance of Dawson Range inclusions are prominent at the southern contact of the main plug, Wolverine Creek metamorphic rocks increase along the northern contact, and bleached diorite increases at the eastern contact of the main plug. Strong potassic alteration locally destroys primary textures.
1.4 |
Mineralization |
Primary copper, gold and molybdenum mineralization was deposited from hydrothermal fluids that exploited the contact breccias and fractured wall rocks. Better grades occur in the breccias and gradually decrease outwards away from the contact zone both towards the centre of the stock and outward into the granitoids and schists. The main mineralization types are:
| Leached Cap Mineralization (CAP) This oxide gold zone is gold-enriched and copper- depleted due to supergene alteration processes as well as the lower specific gravity of this zone relative to the other supergene zones. Weathering has replaced most minerals with clay. The weathering is most intense at the surface and decreases with depth. |
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| Supergene Oxide Mineralization (SOX) This zone is copper-enriched, with trace molybdenite. It generally occurs as a thin layer above the Supergene Sulphide zone. Where present, the supergene oxide zone averages 10 metres thick, and can contain chalcanthite, malachite and brocanthite, with minor azurite, tenorite, cuprite and neotocite. |
| Supergene Sulphide Mineralization (SUS) Supergene copper mineralization occurs in an up to 200 metre-deep weathered zone below the leached cap and above the hypogene. It has an average thickness of 60 metres. Grades of the Supergene sulphide zone vary widely, but are highest in fractured and highly pyritic zones, due to their ability to promote leaching and chalcocite precipitation. The copper grades in the Supergene Sulphide zone are almost double the copper grades in the Hypogene (0.43% Cu versus 0.23% Cu). |
| Hypogene Mineralization Hypogene mineralization occurs throughout the various alteration zones of the Casino Porphyry deposit, as mineralized stock-work veins and breccias. Significant Cu-Mo mineralization is related to the potassically-altered breccia surrounding the core Patton Porphyry, as well as in the adjacent phyllically-altered host rocks of the Dawson Range Batholith. The pyrite halo in this mineralization is host to the highest Cu values on the property. |
Native gold can occur as free grains in quartz (50 to 70 microns) and as inclusions in pyrite and/or chalcopyrite grains (1 to 15 microns). High grade smoky quartz veins with numerous specks of visible gold are also reported to exist.
1.5 |
Exploration Status |
In 2009, Quantec Geoscience Limited of Toronto, Ontario performed Titan-24 Galvanic Direct Current Resistivity and Induced Polarization (DC/IP) surveys as well as a Magnetotelluric Tensor Resistivity (MT) survey over the entire grid. Magnetotelluric Resistivity results in high resolution and deep penetration (to 1 km) and the Titan DC Resistivity & Induced polarization provides reasonable depth coverage to 750 m.
In 2010, all Pacific Sentinels historic drill core stored at the Casino Property was re-logged. The purpose of the re-logging was to provide data for the new lithology and new alteration models.
In 2011 and 2012, WCGC focused on geotechnical, metallurgical and baseline environmental studies, however certain of the drill holes were also drilled, logged and sampled for exploration purposes. In 2011, the program involved 41 drill holes for a total of 3,163.26 m. In 2012, six holes (228.07 m) were drilled for geotechnical purposes and 5 holes (1,507.63 m) were drilled for metallurgical sampling.
1.6 |
Development and Operations |
1.6.1 |
Mining and Processing |
A mine plan was developed to supply ore to a conventional copper sulphide flotation plant with the capacity to process ore at a nominal rate of 120,000 tonnes per day, or 43.8 million tonnes per year. Actual annual throughput will vary depending on the ore hardness encountered during the period. The mine is scheduled to operate two 12 hour shifts per day, 365 days per year.
Both sulphide copper-molybdenum ore and oxide gold ore will be processed. Copper-molybdenum ore will be transported from the mine to the concentrator facility and oxide gold ore will be transported from the mine to a crushing facility ahead of a heap leaching facility and a gold recovery facility.
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Copper-molybdenum ore will be processed by crushing, grinding, and flotation to produce copper and molybdenum sulphide mineral concentrates. Copper concentrate will be loaded into highway haul trucks and transported to the Port of Skagway for ocean shipment to market. Molybdenum concentrate will be bagged and loaded onto highway haul trucks for shipment to market.
Oxide gold ore will be leached with an aqueous leach solution. Gold in the enriched (or pregnant) leach solution which will extracted by using carbon absorption technology to produce gold doré bars. The enriched leach solution will also be treated to recover copper and cyanide and produce a copper sulphide precipitate. The copper sulphide precipitate will be bagged and loaded onto highway haul trucks for shipment to market. Recovery methods are discussed more in depth in Section 17.
1.6.2 |
Metallurgical Testing and Metal Recoveries |
Recent test work by METCON Research on the oxide cap material showed that good recoveries of gold and acceptable cyanide consumptions could be obtained by integrating the cyanide heap leach with the SART process. This process has been adopted for this feasibility study.
Flotation testing by G&T Metallurgical from 2008 to 2012 indicated that copper concentrate grades of 28% copper could be routinely achieved at good copper recoveries with a primary grind size of 80% passing 200 µm and a regrind of 80% passing 25 µm. Gold and silver will be recovered with the copper concentrate. Molybdenum will be recovered to a molybdenum concentrate in a separate flotation circuit.
The average metal recoveries expected from mill processing following the planned mill feed schedule are noted below:
| Copper recovery to copper concentrate, percent | 86 |
| Gold recovery to copper concentrate, percent | 67 |
| Silver recovery to copper concentrate, percent | 53 |
| Molybdenum recovery to molybdenum concentrate, percent | 71 |
The metal recoveries expected from oxide cap heap leach processing are based on:
| Gold recovery, percent | 66 |
| Silver recovery, percent | 26 |
| Copper recovery to SART precipitate, percent | 18 |
1.6.3 |
Infrastructure |
The region is serviced by paved all-weather roads connecting the towns of Carmacks and Whitehorse in the Yukon with the Port of Skagway Alaska. With the completion of the 132 km Casino access road, the project will have an all-weather access route through Carmacks to Whitehorse (approx. 380 km) and to the Port of Skagway (550 km). The Port of Skagway has existing facilities to store and load-out concentrates as well as facilities to receive bulk commodity shipments, fuels and connection to the Alaska Marine Highway. The Port of Skagway is developing plans to expand these facilities to better serve the expanding mining activity in the Yukon and Alaska.
The City of Whitehorse is the government, financial and commercial hub of the Yukon with numerous business and service entities to support the project, and represents a major resource to staff the project. Whitehorse has an international airport and provides commercial passenger and freight services for the region. The proposed new access road alignment is shown in Section 18.2 of this report.
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A new airstrip will be constructed at the mine to accommodate appropriately sized aircraft. The existing airstrip will be razed in preparation for grading for process facilities.
1.6.3.1 |
Power |
Electrical power to the mine will be developed in two phases. An initial power plant designated the Supplementary Power Plant will be constructed near the main workforce housing complex to provide power to the camp, to construction activities, and to the heap leach facilities that go into operation before the concentrator facility is operational.
The Supplementary Power Plant will consist of three internal combustion engines (ICE), dual fuel driven generators (capable of using both LNG and diesel) with a combined power output of 20.1 MW.
A Main Power Plant will be constructed at the Casino concentrator complex and will supply the electrical energy required for operation of the mine, concentrator, oxide ore treatment facilities and all infrastructure facilities. The primary electrical power generation will be provided by two gas turbine driven generators and a steam generator, operating in combined cycle mode (CCGT) to nominally produce 125 MW. Two internal combustion engine (ICE) driven generators will provide another 18.6 MW of power for black start capability, emergency power, and to complement the gas turbine generation when required. The gas turbines and the ICEs will be fueled by natural gas (supplied as liquefied natural gas, or LNG).
LNG will be transported to the site from Fort Nelson, British Columbia via tanker trucks and stored on-site in a large, 10,000 m3 site-fabricated storage tank to supply the power plant. In addition to providing fuel for the power plants, the LNG facility will provide fuel for the mine haulage fleet and over the highway tractors used for hauling concentrates and LNG tankers. Distribution to the vehicles will be by two portable fueling stations and two mobile refuelers.
1.6.3.2 |
Water |
The main fresh water supply will be supplied from the Yukon River. The water will be collected in a riverbank caisson and radial well system (Ranney Well) and pumped through an above-ground insulated 36 diameter by 17.4 km long pipeline with four booster stations to the 22,000 m3 capacity freshwater pond near the concentrator. The design capacity of the fresh water collection and transfer system will be approximately 3,400 cubic meters per hour.
The fire water requirement is 341 m3/h for two hours. This demand is satisfied by a fire reserve capacity of 682 m3 in the lower portion of the freshwater pond that will be unavailable for other uses.
Potable water will be produced by filtering and chlorinating fresh water and will be stored and distributed separately.
Process water reclaimed from the tailings pond and from the plant will be collected in a 63,700 m3 process water pond. The total process water supply to the plant required at design tonnage is 11,191 m3/h. The total feed to the pond consists of 7,122 m3/h combined thickener overflow, 3,228 m3/h reclaim water from the tailings pond and 841 m3/h fresh water makeup. Assuming the reclaim water system is not operating the plant can run for 19.7 hours with all other feed streams operating at the design rates.
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1.6.4 |
Permits |
The Yukon Socioeconomic Assessment Board (YESAB) will assess the Casino Project for environmental and socio-economic effects under the Yukon Environmental and Socioeconomic Assessment Act (YESAA). At the conclusion of the assessment, YESAB issues its recommendations to a decision body for consideration. For the Casino Project, it is expected that the designated decision body will be the Yukon Government.
After assessment, the project must secure certain permits and licenses. Mining related projects in the Yukon are regulated through territorial and federal legislation by various agencies, including government departments and independent quasi-judicial boards. The regulatory permitting and licensing processes are separate from YESAA. There is no single-window application process for regulatory permitting. Separate applications and information packages are required for each authorization and agency. The main pieces of legislation that will govern mining related activities for the Casino properties include:
| Quartz Mining Act; |
| Waters Act; |
| Territorial Lands (Yukon) Act; |
| Environment Act; |
| Highways Act; |
| Dangerous Goods Transportation Act; |
| Fisheries Act; |
| Yukon Occupational Health and Safety Act. |
Work on these permits is in progress. Environmental study results are detailed in Section 20 of this report.
1.7 |
Mineral Resource and Mineral Reserve Estimates |
1.7.1 |
Metal Pricing |
Table 1-1 shows a summary of metal pricing that has been used for this report. Long-term metal prices used in the financial model were converted from US dollars using a long term exchange rate of C$:US$ = 0.95 and are shown in Canadian dollars.
Table 1-1: Summary of Metal Pricing
Copper | Gold | Molybdenum | Silver | |
Resources | $2.00/lb | $875.00/oz | $11.25/lb | $11.25/oz |
Reserves | $2.75/lb | $1,300.00/oz | $14.50/lb | $23.00/oz |
Financial Model | $3.16/lb | $1,473.68/oz | $14.74/lb | $26.32/oz |
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1.7.2 |
Mineral Resource |
Table 1-2 summarizes the mineral resources for the Casino Project.
Table 1-2: Mineral Resource-Inclusive of Mineral Reserve
Supergene and Hypogene Zones
(Mill Resource) |
Cutoff CuEq (%) |
Ore Mtonnes |
Copper (%) |
Gold (g/t) |
Moly (%) |
Silver (g/t) |
CuEq (%) |
Measured Mineral Resource | |||||||
Supergene Oxide | 0.25 | 25 | 0.28 | 0.52 | 0.026 | 2.38 | 0.77 |
Supergene Sulphide | 0.25 | 36 | 0.39 | 0.41 | 0.029 | 2.34 | 0.84 |
Hypogene | 0.25 | 32 | 0.32 | 0.38 | 0.026 | 1.94 | 0.73 |
Total Measured Resource | 0.25 | 93 | 0.34 | 0.43 | 0.027 | 2.21 | 0.78 |
Indicated Mineral Resource | |||||||
Supergene Oxide | 0.25 | 36 | 0.23 | 0.21 | 0.019 | 1.44 | 0.46 |
Supergene Sulphide | 0.25 | 216 | 0.24 | 0.22 | 0.019 | 1.72 | 0.50 |
Hypogene | 0.25 | 711 | 0.17 | 0.21 | 0.023 | 1.65 | 0.45 |
Total Indicated Resource | 0.25 | 963.6 | 0.19 | 0.21 | 0.022 | 1.66 | 0.46 |
Measured/Indicated Mineral Resource | |||||||
Supergene Oxide | 0.25 | 61 | 0.25 | 0.34 | 0.022 | 1.83 | 0.59 |
Supergene Sulphide | 0.25 | 252 | 0.26 | 0.25 | 0.021 | 1.81 | 0.55 |
Hypogene | 0.25 | 743 | 0.17 | 0.22 | 0.023 | 1.66 | 0.46 |
Total Measured/Indicated Resource | 0.25 | 1057 | 0.20 | 0.23 | 0.022 | 1.71 | 0.49 |
Inferred Mineral Resource | |||||||
Supergene Oxide | 0.25 | 26 | 0.26 | 0.17 | 0.010 | 1.43 | 0.41 |
Supergene Sulphide | 0.25 | 102 | 0.20 | 0.19 | 0.010 | 1.49 | 0.38 |
Hypogene | 0.25 | 1568 | 0.14 | 0.16 | 0.020 | 1.36 | 0.37 |
Total Inferred Resource | 0.25 | 1696 | 0.14 | 0.16 | 0.019 | 1.37 | 0.37 |
Leached Cap/Oxide Gold Zone | Cutoff | Ore | Copper | Gold | Moly | Silver | CuEq |
(Heap Leach Resource) | Gold (g/t) | Mtonnes | (%) | (g/t) | (%) | (g/t) | (%) |
Measured Mineral Resource | 0.25 | 31 | 0.05 | 0.52 | 0.025 | 2.94 | N.A. |
Indicated Mineral Resource | 0.25 | 53 | 0.03 | 0.33 | 0.017 | 2.36 | N.A. |
Measured/Indicated Resource | 0.25 | 84 | 0.04 | 0.40 | 0.020 | 2.57 | N.A. |
Inferred Mineral Resource | 0.25 | 17 | 0.01 | 0.31 | 0.008 | 1.93 | N.A. |
CuEq is based on metal prices of US$2.00/lb copper, $US875/oz gold, US$11.25/lb molybdenum, and US$11.25/oz silver and assumes 100% metal recovery. |
The supergene oxide, supergene sulphide, and hypogene zones are mill resources and are tabulated at a 0.25% copper equivalent cutoff grade. Measured and indicated supergene and hypogene resources amount to 1.06 billion tonnes at 0.20% copper, 0.23 g/t gold, 0.022% molybdenum, and 1.71 g/t silver. Inferred resources are an additional 1.7 billion tonnes at 0.14% copper, 0.16 g/t gold, 0.019% molybdenum, and 1.37 g/t silver.
The leach cap contains potential heap leach ore and is tabulated at a 0.25 g/t gold cutoff grade. Measured and indicated heap leach ore amounts to 84.0 million tonnes at 0.04% copper, 0.40 g/t gold, and 2.57 g/t silver. Inferred resources are an additional 17 million tonnes at 0.01% copper, 0.31 g/t gold, and 1.93 g/t silver.
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1.7.3 |
Mineral Reserve |
The mill ore reserve amounts to 965.2 million tonnes at 0.204% copper, 0.240 g/t gold, 0.0227% molybdenum, and 1.74 g/t silver. Heap leach reserve is an additional 157.5 million tonnes at 0.292 g/t gold and 0.036% copper. Table 1-3 presents the mineral reserve for the Casino Project.
Table 1-3: Mineral Reserve
Ore Ktonnes | Tot Cu | Gold | Moly | Silver | |
Mill Ore Reserve: | (%) | (g/t) | (%) | (g/t) | |
Proven Mineral Reserve: | |||||
Mill Ore | 91,602 | 0.336 | 0.437 | 0.0275 | 2.23 |
Probable Mineral Reserve: | |||||
Mill Ore | 729,777 | 0.203 | 0.235 | 0.0240 | 1.78 |
Low Grade Stockpile | 143,828 | 0.122 | 0.139 | 0.0133 | 1.19 |
Total Probable Reserve | 873,605 | 0.190 | 0.219 | 0.0222 | 1.68 |
Proven/Probable Reserve | |||||
Mill Ore | 821,379 | 0.218 | 0.258 | 0.0244 | 1.83 |
Low Grade Stockpile | 143,828 | 0.122 | 0.139 | 0.0133 | 1.19 |
Total Mill Ore Reserve | 965,207 | 0.204 | 0.240 | 0.0227 | 1.74 |
Ore ktonnes | Gold | Tot Cu | Moly | Silver | |
Heap Leach Reserve: | (g/t) | (%) | (%) | (g/t) | |
Proven Mineral Reserve | 31,760 | 0.480 | 0.051 | N/A | 2.79 |
Probable Mineral Reserve | 125,694 | 0.244 | 0.032 | N/A | 2.06 |
Total Heap Leach Reserve | 157,454 | 0.292 | 0.036 | N/A | 2.21 |
1.8 |
Costs and Financial Data |
1.8.1 |
Capital Cost Estimate |
The initial capital investment for complete development of the project is estimated to be $2.456 billion total direct and indirect cost. Table 1-4 shows the capital cost breakdown.
Table 1-4: Capital Cost Estimate Summary
(millions) | |
Direct
Costs Mining Equipment & Mine Development Concentrator (including related facilities) Heap Leach Operation Camp |
$454 $904 $139 $70 |
Sub-Total | $1,566 |
Indirect Costs
Infrastructure Costs Power Plant Access Road Airstrip Subtotal Infrastructure |
$295 $209 $99 $24 $332 |
Contingency | $218 |
Owner's Costs | $44 |
Grand Total | $2,456 |
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In addition to the above, the total life of mine sustaining capital is estimated to be $361.7 million. This capital will be expended during a 22 year period.
1.8.2 |
Operating Cost Estimate |
Life of mine average operating cost is $8.52 per tonne for sulphide ore, which includes mining, concentrator plant and general and administrative costs. The life of mine average operating cost is $4.04 per tonne for oxide ore which includes processing only.
1.8.3 |
Financial Analysis |
Net Income after Tax amounts to $6.7 billion for the life of the mine. The base case economic analysis (Table 1-5) indicates that the project has an Internal Rate of Return (IRR) of 20.1% after taxes with a payback period of 3.0 years.
Table 1-5 compares the base case project financial indicators with the financial indicators for other cases when the sales price, the amount of capital expenditure, operating cost, and copper recovery are varied from the base case values. By comparing the results of this sensitivity study, it can be seen that the project IRRs sensitivity to variation in metal sales price has the most impact, while variation of operating cost, variation of mill recovery, and variation of capital cost are approximately equal.
Table 1-5: Sensitivity Analysis (After tax figures)
Payback | ||||||
NPV @ 0% | NPV @ 5% | NPV @ 8% | NPV @ 10% | IRR | Years | |
Base Case (LTP) | $6,651 | $2,986 | $1,830 | $1,296 | 20.1% | 3.0 |
SEC Prices | $7,848 | $3,621 | $2,287 | $1,669 | 22.5% | 2.7 |
Spot Prices* | $7,744 | $3,597 | $2,282 | $1,672 | 22.7% | 2.6 |
Base-Case Sensitivities | ||||||
Metals Price +10% | $8,157 | $3,786 | $2,407 | $1,768 | 23.1% | 2.6 |
Metals Price -10% | $5,146 | $2,186 | $1,253 | $824 | 16.7% | 3.5 |
Capex +10% | $6,499 | $2,840 | $1,689 | $1,158 | 18.4% | 3.2 |
Capex -10% | $6,804 | $3,133 | $1,972 | $1,434 | 22.1% | 2.7 |
Opex +10% | $6,103 | $2,705 | $1,631 | $1,135 | 19.0% | 3.1 |
Opex -10% | $7,200 | $3,268 | $2,029 | $1,457 | 21.1% | 2.9 |
Mill Recovery +5% | $7,304 | $3,329 | $2,075 | $1,495 | 21.3% | 2.8 |
Mill Recovery -5% | $5,998 | $2,644 | $1,585 | $1,096 | 18.7% | 3.1 |
$ in millions | ||||||
*Spot prices are on the last | Base Case | SEC Prices | Spot Prices* | |||
day of December 2012 | Copper | $3.16 | Copper | $3.67 | Copper | $3.57 |
Molybdenum | $14.74 | Molybdenum | $14.67 | Molybdenum | $11.80 | |
Gold | $1,473.68 | Gold | $1.487.85 | Gold | $1,657.50 | |
Silver | $26.32 | Silver | $28.80 | Silver | $29.95 |
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1.9 |
Conclusions and Recommendations |
The Casino mineral occurrence can be successfully and economically exploited by proven and conventional mining and processing methods under the conditions and assumptions outlined in this report. Overall, the main risk and key metric for financial success is metal pricing.
Opportunities exist to enhance the project economics including:
| Conversion of some of the inferred resource into measured and indicated. |
| Sharing of infrastructure development costs with other parties. |
| Optimize the process during the basic and detailed engineering phases. |
To further enhance the project, M3 recommends that CMC perform the following:
| CMC should continue to further define the resource through exploration drilling, particularly in the more sparsely drilled area west of the main zone and deep drilling adjacent to the microbreccia pipe (approximately $2 million required). |
| CMC should continue with the environmental studies and permitting efforts now underway (approximately $5 million required). |
| CMC should continue with the engineering effort in support of permitting (approximately $1 million required). |
| CMC should continue to monitor developments in the Yukon, northern British Columbia, and Alaska to be in a position to share infrastructure development (approximately $200,000 required). |
- 25 -
(Source: Yukon Highway Map, Yukoninfo. com)
- 26 -
Figure 1-2: Road to Casino Concentrator Site from the Yukon River
(Source: M3)
Figure 1-3: Path from Yukon River to Proposed Fresh Water Pond
(Source: M3)
- 27 -
Work Undertaken in 2014 and Work Plan for 2015
Permitting
Western submitted the Casino Project Proposal (the Project Proposal) to the Yukon Environmental and Socio-economic Assessment Board (YESAB) for assessment in January 2014. The assessment process in the Yukon involves several steps after the submission of the Project Proposal concluding with the issuance of a Decision Document by YESAB. Once a project receives the Decision Document, the next step is obtaining a Quartz Mining License (QML). The QML would allow the Company to begin construction of the mine. The final significant permit following the issue of the QML is the Yukon Water License.
On November 28, 2014, the Casino Project re-entered the YESAB process after a six-month hold period to allow for additional consultation with Little Salmon/Carmacks First Nation (LSCFN). On January 23, 2015, YESAB provided its Adequacy Review Report to the Company. This report outlines the YESABs requests for further information before the Casino Project may proceed to the public screening phase of assessment. Western submitted additional information on March 16, 2015. YESAB will review the additional information and either declare the application adequate to advance to the screening phase or request further information.
Community Relations
The Casino Project is located primarily within Selkirk First Nations Traditional Territory. On March 12, 2014, Western and Selkirk First Nation announced that they had entered into an agreement relating to the Casino Project. The agreement commits the parties to work cooperatively to review, evaluate and discuss the Casino Project, and lays the foundation for establishing future agreements.
On November 18, 2014, Western and LSCFN signed a Consultation and Technical Cooperation Protocol and a Negotiation Protocol. The protocols commit the parties to work cooperatively to review, evaluate and discuss the Casino Project, and lay the foundation for establishing future agreements.
The Company continues to work with First Nations and local communities to ensure that the various stakeholder concerns are addressed.
Development
The Company continues to develop certain key engineering aspects of the project, particularly in regards to power supply, liquefied natural gas supply chain, and project execution planning.
In May 2014, the Company signed a memorandum of understanding with Siemens Canada Ltd. (Siemens). Under the terms of this agreement, the two parties will work together to develop a concept for integrated electrical mining equipment from Siemens for the Casino Project, including the power plant and the mill drives.
In August 2014, Western announced that it has awarded the engineering, procurement and construction management (EPCM) contract for Casino to M3 Engineering & Technology Corporation of Tucson, Arizona (M3). M3 is a logical choice because it is very familiar with Casino, having worked on the project from an early stage preparing two pre-feasibility studies as well as the feasibility study issued in early 2013.
- 28 -
In September 2014, the Company announced that it signed a letter of intent (LOI) with M3 committing to develop an agreement for M3 to operate and maintain the Casino mine. The LOI outlines the general terms and scope by which M3 will operate the heap leach and concentrator processing facilities at Casino and provide procurement and contract management services to the Company. Under the direction of Western, M3 will manage all aspects of day-to-day operations at the mine site and the port of export, including mining, contract maintenance of mining equipment, power plant operations and maintenance, concentrate storage and load-out, and other support services contracts.
This arrangement is expected to enhance the Companys ability to finance, build and operate the Casino mine and is expected to provide substantial benefits while having minimal impact on project economics.
Timelines
In 2015, the Company will continue to work with governments, local communities, and stakeholders to advance the Casino Project through the permitting process. Based on Casinos permitting progress to date, the Company now estimates that key permits will be received near the end of 2016, with construction starting as soon as practicable thereafter.
DIVIDENDS
The Company has not paid any dividends on its common shares since its incorporation, nor has it any present intention of doing so. The Company anticipates that all available funds will be used to undertake exploration and development programs on its mineral properties.
DESCRIPTION OF CAPITAL STRUCTURE
Authorized Capital
The authorized capital of the Company consists of the following:
1. |
Unlimited number of common shares without par value. As of March 19, 2015, the Company had 94,194,936 common shares outstanding. |
All of the issued common shares of the Company are fully paid and non-assessable. All of the common shares issued rank equally as to dividends, voting rights (one vote per share) and distribution of assets on winding up or liquidation. Shareholders have no pre-emptive rights, nor any right to convert their common shares into other securities. There are no existing indentures or agreements affecting the rights of shareholders other than the Notice of Articles and Articles of the Company; and
- 29 -
2. |
Unlimited number of Preferred Shares without par value, with the following special rights and restrictions: they may be issued in one or more series and the directors may from time to time fix the number and designation and create special rights and restrictions. Preferred shares would rank in priority, with respect of payment of dividends and distributions of assets on a liquidation, dissolution or winding-up of the Company, to shares ranking junior to the preferred shares including common shares. Preferred shares do not give the holders any right to receive notice of or vote at general or special meetings of the Company. As of the date of this AIF, there are no Preferred Shares outstanding. |
Stock Options
The Company has a stock option plan pursuant to which the directors of the Company are authorized to grant stock options to directors, officers, employees, and consultants of the Company and its subsidiaries.
As at March 19, 2015, the following stock options were outstanding under the stock option plan:
Expiry Date | Number of stock options | Exercise price |
March 30, 2015 | 100,000 | $1.74 |
July 16, 2015 | 651,667 | $0.79 |
November 4, 2015 | 100,000 | $1.50 |
July 6, 2016 | 1,325,000 | $2.84 |
September 14, 2016 | 200,000 | $2.84 |
July 12, 2017 | 1,480,000 | $0.80 |
September 10, 2017 | 50,000 | $0.84 |
January 15, 2018 | 100,000 | $1.59 |
July 9, 2018 | 1,367,334 | $0.60 |
December 12, 2018 | 150,000 | $0.60 |
May 7, 2019 | 100,000 | $0.96 |
July 17, 2019 | 775,000 | $0.88 |
March 13, 2020 | 100,000 | $0.67 |
TOTAL | 6,499,001 |
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MARKET FOR SECURITIES
The common shares of the Company are listed on the Toronto Stock Exchange under the symbol WRN. During the Company's most recently completed financial year, the Companys common shares traded as follows:
Month | High | Low | Total Volume |
January | 0.87 | 0.67 | 1,211,282 |
February | 0.93 | 0.67 | 1,789,684 |
March | 1.10 | 0.81 | 1,487,090 |
April | 1.08 | 0.88 | 1,105,696 |
May | 1.05 | 0.92 | 1,420,240 |
June | 0.97 | 0.80 | 1,456,349 |
July | 0.94 | 0.82 | 860,871 |
August | 0.87 | 0.79 | 406,086 |
September | 0.81 | 0.65 | 946,363 |
October | 0.67 | 0.55 | 787,450 |
November | 0.78 | 0.56 | 774,570 |
December | 0.74 | 0.54 | 1,805,159 |
PRIOR SALES
The Company issued the following securities which are not listed or quoted on a marketplace during the most recently completed financial year:
Grant Date | Number of Stock Options | Exercise Price |
May 7, 2014 | 100,000 | $0.96 |
July 17, 2014 | 825,000 | $0.88 |
ESCROWED SECURITIES
None of the Companys securities are held under an escrow or similar arrangement.
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DIRECTORS AND OFFICERS
Name, Occupation, and Experience
The following table sets forth all current directors and executive officers as of the date of this AIF, with each position and office held by them in the Company and the period of service as such. Each directors term of office expires at the next annual general meeting.
Name and Position |
Province and Country
of Residence(1) |
Director or Officer
since |
Dale Corman Chairman, Director and Chief Executive Officer |
British Columbia, Canada | May 3, 2006 |
Robert Gayton (2) (3)
(4) Director |
British Columbia, Canada | May 3, 2006 |
Archie Lang Director |
Yukon, Canada | October 22, 2014 |
David Williams (2) (3)
(4) Director |
Ontario, Canada | May 3, 2006 |
Klaus Zeitler (2) (3) (4) Director |
British Columbia, Canada | May 3, 2006 |
Paul West-Sells President and Chief Operating Officer |
British Columbia, Canada | November 20, 2008 |
Julien François, Vice President Finance and Chief Financial Officer |
British Columbia, Canada | May 3, 2006 |
Cameron Brown Vice President Engineering |
Washington State, USA | July 16, 2010 |
Corey Dean Corporate Secretary |
British Columbia, Canada |
May 3, 2006 |
(1) |
The information as to country of residence and principal occupation has been furnished by the respective individuals. |
(2) |
Denotes member of Audit Committee. |
(3) |
Denotes member of Compensation Committee. |
(4) |
Denotes member of the Corporate Governance and Nominating Committee. |
The principal occupation of Robert Gayton, Archie Lang, David Williams, Klaus Zeitler, and Corey Dean is not acting as director or officer of the Company. Information as to the principal occupation of the directors and officer is described in the narratives below.
Dale Corman, B.Sc., P.Eng., has served as Chief Executive Officer, Director, and Chairman of the Board Directors since the Companys inception in 2006. From 1995 to 2006, he was Chairman of the Board of Directors and Chief Executive Officer of Western Silver Corporation. He has 30 years experience as a senior corporate officer of publicly listed companies in Canada and the United States, as well as extensive expertise in mineral and geothermal exploration and development, property evaluation and acquisition, project financing, and corporate management. Mr. Corman received a B.S. in geology from Rensselaer Polytechnic Institute in Troy, New York, in 1961 and obtained Professional Engineer status in Ontario in 1972.
Mr. Corman is a Director of Spanish Mountain Gold [TSXV:SPA], NorthIsle Copper and Gold Inc. [TSXV:NCX], and Copper North Mining Corp. [TSXV:COL].
- 32 -
Robert Gayton, B.Comm., Ph.D., FCA, has served as Director, and Chairman of the Audit Committee since the Companys inception in 2006.
Dr. Gayton is a Chartered Accountant and holds a Ph.D. Accounting/Finance from the University of California, Berkeley (1973). Dr. Gayton was a member of the Business School faculties at Berkeley and the University of BC from 1965 to 1974.
In 1974, Dr. Gayton left academia to join Peat Marwick Mitchell (now KPMG LLP) and establish their professional development program. He became partner in 1976 and transferred to the audit practice in 1979. In 1987, Dr. Gayton left the firm to join a client and since that time has acted as financial advisor/officer to various resource based companies.
He is currently a director and chair/member of the audit and other committees of the following companies: Amerigo Resources Ltd. [TSX:ARG], B2 Gold Corp. [TSX:BTO, NYSE MKT:BTG], Eastern Platinum Limited [TSX & AIM:ELR], and Nevsun Resources Ltd. [TSX & NYSE MKT:NSU].
Archie Lang was appointed as Director in 2014. Mr. Lang is a life-long northerner with an expertise in economic development. He is a former two term elected member of the Yukon Legislative Assembly who was appointed as Minister of Energy Mines and Resources from 2002 to 2008, Minister of Highway and Public Works from 2008 to 2011, and Minister of Community Services from 2008 to 2011. Mr. Lang is experienced in developing and managing projects in consultation and partnership with all levels of government, including First Nations.
Mr. Langs work in those Ministries provided him with in-depth knowledge of key issues surrounding the development of natural resources in the north. During his tenure as Minister, Archie also assisted in managing the devolution of responsibility for these portfolios from Canada to Yukon and, in conjunction with the Federal Government and First Nations, implemented the Yukon Environmental and Socioeconomic Assessment Act.
David Williams, LL.B., MBA, has served as Director since the Companys inception in 2006. Mr. Williams currently manages investments for his family holding company and is involved in a number of charitable organizations. Mr. Williams holds a Master of Business Administration Degree from Queens University and a Doctor of Civil Laws Degree from Bishops University. He is a Director of SQI Diagnostics [TSXV:SQD].
Mr. Williams has held several executive and board positions within publicly-listed and private companies. In these roles, Mr. Williams was responsible for the overall management of the business, which included reviewing and analyzing financial statements and overseeing regulatory reporting.
Klaus Zeitler, Ph.D., has served as Director since the Companys inception in 2006. Dr. Zeitler was the founder and CEO of Inmet from 1987 to 1996. Dr. Zeitler was Senior Vice President of Teck Cominco Limited from 1997 to 2002, and previously was on the Board of Directors of Teck Corp. from 1981 to 1997 and Cominco Limited from 1986 to 1996.
Dr. Zeitler is currently CEO, Director, and Chairman of Amerigo Resources Ltd. [TSX:ARG], Chairman and Director of Los Andes Copper Ltd. [TSXV:LA] and Chairman and Director of Rio Alto Mining Limited [TSX:RIO].
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Paul West-Sells, Ph.D., has served as President and Chief Operating Officer since March 2010. Dr. West-Sells has over 20 years' experience in the mining industry. After obtaining his Ph.D. from the University of British Columbia in Metallurgical Engineering, he worked with BHP, Placer Dome, and Barrick in increasingly senior roles in Research and Development and Project Development. Dr. West-Sells has been employed by the Company since 2006, holding a number of technical and executive positions.
Julien François, CPA, CA has served as Vice President, Finance and Chief Financial Officer since the Companys inception in 2006. Prior to joining the Company, he was the Controller of Western Silver Corporation from 2005 to 2006. From 2000 to 2005, Mr. François worked in the audit practice at PricewaterhouseCoopers LLP. Mr. François graduated from the University of British Columbia in 2000 and obtained his professional qualification as a Chartered Accountant in 2004. He is also Chief Financial Officer of Copper North Mining Corp. [TSXV:COL].
Cameron Brown, P. Eng., has served as Vice President, Engineering since July 2010. From 2006 to 2010, Mr. Brown was the Companys Project Manager. Mr. Brown has over 45 years experience in mineral processing and has been responsible for plant maintenance, project management and engineering of major base and precious metal projects. He was formerly Project Manager for Western Silver Corporation and worked for 22 years for Bechtel Mining & Metals in various capacities including; Project Manager, Project Engineering Manager, and Manager of Engineering for Bechtel Mining & Metals (Global).
Corey Dean, B. Comm., L.L.B has served as Corporate Secretary since the Companys inception in 2006. Mr. Dean has practiced corporate, securities and natural resource law with a focus on corporate finance and mergers and acquisitions since 1981. He was educated at the University of British Columbia where he received his B.Comm. in 1979 and his LL.B. in 1980. Since 1987, he has been a partner of the firm of DuMoulin Black LLP, a law firm focused on corporate finance for public companies, and is currently managing partner of the firm. Mr. Dean has an extensive corporate and securities practice with particular emphasis on mergers and acquisitions as well as public and private financings and corporate governance matters. He has advised numerous clients in listing matters on stock exchanges and in cross border financings. He acts as counsel for corporate clients engaged in various industry sectors but primarily in mineral exploration, development and operations.
Mr. Dean is an officer of Bear Creek Mining Corporation [TSXV:BCM] and Copper North Mining Corp. [TSXV:COL].
Control of Securities
As at March 19, 2015, the directors and executive officers of the Company as a group beneficially owned, directly or indirectly, or exercised control or direction over, an aggregate of 7,584,067 common shares of the Company, representing approximately 8.1% of the issued and outstanding common shares of the Company. In addition, the directors and executive officers of the Company as a group held 4,420,000 stock options for the purchase of common shares of the Company. The stock options are exercisable at prices ranging from $0.60 and $2.84 per common share and expire between 2015 and 2020. Of the total stock options held by directors and executive officers, 3,428,330 stock options had vested as at March 19, 2015.
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Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Other than as disclosed below, to the knowledge of the Company, none of the Company's directors or executive officers or any shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, is, at the date of this AIF, or was within ten years before the date of this AIF, a director, chief executive officer or chief financial officer of any company (including the Company) that:
(i) |
was subject to an order that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or |
(ii) |
was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. |
For the purposes of the disclosure above, an order means (a) a cease trade order, including a management cease trade order, (b) an order similar to a cease trade order, or (c) an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days.
David Williams was a director of the reporting issuers when the following events occurred:
On June 30, 2010, Roador Industries Ltd. (Roador) was delisted from the TSX Venture Exchange for failure to file financial statements. The Ontario Securities Commission and the British Columbia Securities Commission issued cease trade orders on Roador in early February 2011. Roador is in the process of seeking an alternate exchange listing. The cease trade orders are still in effect.
To the knowledge of the Company, no director or executive officer of the Company or any shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company:
(i) |
is, at the date of this AIF, or has been within the ten years before the date this AIF, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or |
(ii) |
has, within the ten years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder. |
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To the knowledge of the Company, no director or executive officer of the Company or any shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to:
(i) |
any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or |
(ii) |
any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision. |
Conflicts of Interest
Certain of the Company's directors and officers serve or may agree to serve as directors or officers of other reporting companies or have significant shareholdings in other reporting companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the event that such a conflict of interest arises at a meeting of the Company's directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms and such director will not participate in negotiating and concluding terms of any proposed transaction.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
The Company and its properties are not currently subject to, and were not during the Company's most recently completed financial year subject to, any legal proceedings, nor are any proceedings known to be contemplated that involve a claim for damages in an amount that excluding interest and costs exceeds 10% of the current assets of the Company.
During the Companys most recently completed financial year and up to the date of this AIF, there were no: (a) penalties or sanctions imposed against the Company by a court relating to securities legislation or by a securities regulatory authority, (b) other penalties or sanctions imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision, or (c) settlement agreements the Company entered into before a court in respect of securities legislation or with a securities regulatory authority.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Other than as disclosed herein, to the knowledge of the Company, none of the following persons has had any material interest, direct or indirect, in any transaction during the Company's three most recently completed financial years or during the current financial year that has materially affected or is reasonably expected to materially affect the Company:
(a) |
a director or executive officer of the Company; | |
(b) |
a person or company that beneficially owns, or controls or directs, directly or indirectly more than 10% of any class or series of the outstanding voting securities of the Company; and | |
(c) |
an associate or affiliate of any of the persons or companies referred to in the above paragraphs (a) or (b). |
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The Companys directors and officers may serve as directors or officers of other public resource companies or have significant shareholdings in other public resource companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. The interests of these companies may differ from time to time. See Risk Factors Conflicts of Interest and Conflicts of Interest.
TRANSFER AGENTS AND REGISTRARS
The registrar and transfer agent of the Company is Computershare at its offices in Vancouver, British Columbia, at 510 Burrard Street, Vancouver, BC, V6C 3B9, in Toronto, Ontario, and in Denver, Colorado, USA.
MATERIAL CONTRACTS
The Company has entered into the following material contracts, other than in the ordinary course of business:
| Net Smelter Returns Royalty Agreement dated December 21, 2012 between Western Copper and Gold Corporation, Casino Mining Corp., and 8248567 Canada Limited. |
| Royalty Purchase Agreement dated December 20, 2012 between Western Copper and Gold Corporation, Casino Mining Corp., and 8248567 Canada Limited. |
| Option Agreement dated July 2002 between CRS Copper Resources Corp. and Great Basin Gold Ltd. |
| Amended and Restated Arrangement Agreement dated August 30, 2011 between Western Copper Corporation, NorthIsle Copper and Gold Inc., Copper North Mining Corp. and Others. |
NAMES AND INTERESTS OF EXPERTS
The information of a scientific or technical nature regarding the Casino Project is based on the 2013 Feasibility Study prepared by Conrad E. Huss, P. E., Thomas L. Drielick, P.E., Jeff Austin, P. Eng., Gary Giroux, P. Eng., Scott Casselman, P.Geo., Graham Greenaway, P. Eng., Michael G. Hester, FAus IMM, and Jesse Duke, P. Geo.; each of whom is a qualified person pursuant to NI 43-101.
Other than as disclosed below, to the best of the Companys knowledge, none of the above persons, held at the time of preparing the report, received after preparing the report, or will receive any registered or beneficial interests, direct or indirect, in any securities or other property of the Company or of one of the Company's associates or affiliates in connection with the preparation or certification of the report prepared by such person. Other than as disclosed below, none of the above persons is or is expected to be elected, appointed or employed as a director, officer or employee of the Company or any associate or affiliate of the Company.
In November 2013, Jesse Duke was appointed to the role of Vice President Environmental Affairs of Casino Mining Corp. In December 2013, he was granted 100,000 stock options by the Company.
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The auditors of the Company are PricewaterhouseCoopers LLP, Chartered Accountants, of Vancouver, British Columbia. PricewaterhouseCoopers LLP report that they are independent of the Company in accordance with the Rules of Professional Conduct of the Institute of Chartered Accountants of British Columbia, Canada.
AUDIT COMMITTEE INFORMATION
Audit Committee Charter
The Audit Committee Charter, as approved by the Companys Board of Directors, is included in Schedule A of this AIF.
Audit Committee composition and relevant education and experience
The Audit Committee is comprised of Robert Gayton (Chair), David Williams, and Klaus Zeitler. All three members are independent and are financially literate, as described in National Instrument 52-110 Audit Committees (NI 52-110). Please refer to the Directors and Officers section of this AIF for a detailed description of each members education and experience relevant to being a member of the Audit Committee.
Reliance on Certain Exemptions
Since the commencement of 2014, Westerns most recently completed financial year, the Company has not relied on:
a. |
The exemption in section 2.4 of NI 52-110 (De Minimis Non-audit Services); |
b. |
The exemption in section 3.2 of NI 52-110 (Initial Public Offerings); |
c. |
The exemption in section 3.4 of NI 52-110 (Events Outside Control of Member); |
d. |
The exemption in section 3.5 of NI 52-110 (Death, Disability or Resignation of Audit Committee Member); or |
e. |
An exemption from of NI 52-110, in whole or in part, granted from Part 8 (Exemptions). |
Reliance on the Exemption in Subsection 3.3(2) or Section 3.6
Since the commencement of 2014, Westerns most recently completed financial year, the Company has not relied on the exemption in subsection 3.3(2) of NI 52-110 (Controlled Companies) or section 3.6 of NI 52-110 (Temporary Exemption for Limited and Exceptional Circumstances).
Reliance on Section 3.8
Since the commencement of 2014, Westerns most recently completed financial year, the Company has not relied on the exemption in section 3.8 of NI 52-110 (Acquisition of Financial Literacy) as all members of the Audit Committee are financially literate.
Audit Committee Oversight
At no time since the commencement of 2014, Westerns most recently completed financial year, has a recommendation of the Audit Committee to nominate or compensate an external auditor, not been adopted by the Board of Western.
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Pre-approval policies and procedures
All audit, audit related, tax, and non-audited services to be performed by the external audit firm are pre-approved by the Audit Committee. Before approval is given, the Audit Committee examines the independence of the external auditor in relation to the services to be provided and assesses the reasonableness of the fees to be charged for such services.
External auditor service fees (by category)
The following table sets forth the aggregate professional fees billed to the Company by its external auditor, PricewaterhouseCoopers LLP, during each year ended December 31, 2014 and 2013.
Year ended December 31, | ||
2014 | 2013 | |
Audit Fees | $50,000 | $56,000 |
Audit Related Fees | - | - |
Tax Fees | $9,500 | $13,000 |
All Other Fees | $5,000 | - |
Total | $64,500 | $69,000 |
Audit Fees are professional fees billed for the audit of the Companys annual consolidated financial statements, reviews of interim financial statements and attestation services that are provided in connection with regular statutory or regulatory filings.
Audit Related Fees are professional fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Companys financial statements and are not reported under Audit Fees.
Tax Fees are professional fees billed for tax return preparation and advice related to tax compliance.
All Other Fees include fees billed for services other than disclosed in any other category.
ADDITIONAL INFORMATION
General
Information relating to the Company may be found under the Companys profile on the SEDAR website at www.sedar.com. The information available at www.sedar.com includes the full text of the 2013 Feasibility Study prepared for the Company in respect to the Casino Project described herein.
Additional financial information is provided in the Companys audited annual consolidated financial statements and managements discussion and analysis as at and for the year ended December 31, 2014. This information is also available under the Companys profile on SEDAR at www.sedar.com.
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Schedule A
Audit Committee
Charter
A. |
PURPOSE |
The Board of Directors of the Corporation has an overall responsibility to oversee the affairs of the Corporation for the benefit of the shareholders. The Committee is appointed by the Board to assist the Board in fulfilling its financial oversight responsibilities. The Committees primary duties and responsibilities are to:
| review the effectiveness of the overall process of identifying and addressing material, financial- related business risk and the adequacy of the related disclosure; |
| monitor the integrity of the Corporations financial reporting process and systems of internal controls regarding finance, accounting and legal compliance; |
| monitor the independence and the performance of the Corporations external auditors; |
| provide an avenue of communications among the external auditors, management and the Board of Directors; |
| encourage adherence to, and continuous improvement of, the Corporations policies, procedures and practices relating to financial matters at all levels; and |
| maintain an effective complaints procedure. |
B. |
COMPOSITION AND MEETINGS |
The Committee shall be comprised of a minimum of three or more directors, as determined by the Board, each of whom shall meet the independence requirements of the relevant securities exchanges and regulatory agencies as may apply from time to time. Each member will be independent of management and free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment. All members of the Committee must be financially literate. Financially literate means that the member has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Corporations financial statements.
The Committee members shall be appointed by the Board at its first meeting following each annual shareholders meeting. If the Committee Chair is not designated by the Board, the members of the Committee may designate a Chair by majority vote of the Committee membership.
The Committee shall meet at least four times annually, or more frequently as circumstances dictate. The Committee Chair shall prepare and/or approve an agenda in advance of each meeting. The Committee meetings may be held in person, by telephone conference or by video conference. A majority of the members of the Committee present in person, by teleconferencing or by videoconferencing will constitute a quorum.
The Committee may invite the Corporation's external auditors, the Chief Financial Officer ("CFO"), and such other persons as deemed appropriate by the Committee, to attend meetings of the Committee. The Committee shall meet at least annually with management and the external auditors to discuss any matters that the Committee or each of these groups believes should be discussed. In addition, a portion of each Committee meeting shall be held, in camera, without any member of management being present.
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Schedule A
Audit Committee
Charter
C. |
POWER AND AUTHORITY |
The Committee shall have:
1. |
the power to conduct or authorize investigations into any matter within the scope of its responsibilities; |
2. |
the right to engage independent legal, accounting or other advisors as it determines necessary to carry out its duties and the right to set the compensation for any advisors employed by the Committee; |
3. |
the right at any time and without restriction to communicate directly with the CFO, other members of management who have responsibility for the audit process and external auditors; and |
4. |
such other powers and duties as may be delegated to it from time to time by the Board. |
D. |
RESPONSIBILITIES AND DUTIES - DETAIL |
Review Procedures
The Committee shall:
1. |
review with the external auditors, in advance of the audit, the audit process and standards, as well as regulatory or Corporation-initiated changes in accounting practices and policies and the financial impact thereof, and selection or application of appropriate accounting principles; |
2. |
review with the external auditors and, if necessary, legal counsel, any litigation, claim or contingency, including tax assessments, that could have a material effect upon the financial position of the Corporation and the manner in which these matters are being disclosed in the financial statements; the appropriateness and disclosure of any off-balance sheet matters; and disclosure of related-party transactions; |
3. |
meet at least annually with the external auditors separately from management to review the integrity of the Corporation's financial reporting processes, including the clarity of financial disclosure and the degree of conservatism or aggressiveness of the accounting policies and estimates, performance of internal audit management, any significant disagreements or difficulties in obtaining information, adequacy of internal controls over financial reporting and the degree of compliance of the Corporation with prior recommendations of the external auditors. The Committee shall review with management any matters raised by the external auditors and direct management to implement such changes as the Committee considers appropriate, subject to any required approvals of the Board arising out of the review; |
4. |
discuss with management significant financial or other risk exposures and the steps management has taken to monitor, control and report such exposures; |
5. |
review the Corporations annual audited financial statements and management discussion and analysis prior to public disclosure and make recommendations to the Board respecting approval of the audited financial statements; |
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Schedule A
Audit Committee
Charter
6. |
review with management, the Corporations interim financial results and management discussion and analysis prior to public disclosure. Discuss any significant changes to the Corporations accounting principles and any items required to be communicated by the external auditors. If the statements are to be reviewed by the auditors, the Committee shall consult with the auditors as required during the process. The Committee shall make recommendations to the Board respecting approval of the interim financial statements or, if authorized to do so by the Board, approve the interim statements and MD&A; and |
7. |
periodically assess the adequacy of the disclosure policy and procedures in place including procedures for the review of the Corporations public disclosure of financial information extracted or derived from the Corporations financial statements, other than the public disclosure of the statements themselves, and all FOFI, and satisfy itself that those procedures are satisfactory. If the procedures are not considered satisfactory, the Committee should work with management to revise the procedures appropriately. |
External auditors
1. |
The external auditors shall report and are accountable directly to the Committee. The Committee shall at least annually review the independence and performance of the external auditors. It shall recommend to the Board of Directors the external auditors to be approved at a shareholders' meeting and recommend to the Board any discharge of auditors when circumstances warrant. If the auditors are not to be reappointed, the Committee shall select and recommend a suitable alternative. |
2. |
The Committee is directly responsible for overseeing the work of the external auditor engaged for the purpose of preparing or issuing an auditors report or performing other audit, review or attest services for the Corporation, including the resolution of disagreements between management and the external auditor regarding financial reporting. |
3. |
The Committee is responsible for approving the fees and other significant compensation to be paid to the external auditors, and pre-approving, subject to ratification by the Board, any non-audit services that the auditor may provide. The Committee may delegate certain pre-approval functions for non- audit services to one or more independent members of its Committee if it first adopts specific policies and procedures respecting same and provided such decisions are presented to the full Committee for approval at its next meeting. |
4. |
On an annual basis, the Committee should review and discuss with the external auditors all significant relationships they have with the Corporation that could impair the auditors independence. |
5. |
The Committee shall review and approve the Corporations hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Corporation. |
6. |
The Committee shall obtain from the external auditors confirmation that the external auditors are a 'participating audit' firm for the purpose of National Instrument 52-108 Auditor Oversight and are in compliance with governing regulations. |
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Schedule A
Audit Committee
Charter
E. |
DUTIES AND RESPONSIBILITIES - GENERAL |
The Committee shall:
1. |
on at least an annual basis, review with the Corporations counsel, any legal matters that could have a significant impact on the organizations financial statements, the Corporations compliance with applicable laws and regulations, and inquiries received from regulators or governmental agencies; |
2. |
annually prepare a report to shareholders to be included in the Corporations annual information circular as required by applicable securities laws. The Chairman of the Committee, or other member appointed by the Chair, will review all disclosure documents to be issued by the Corporation relating to financial matters, including news releases, annual information forms and information circulars; |
3. |
review and assess the adequacy of this Charter at least annually and submit it to the Board for approval; |
4. |
annually evaluate the Committee's performance and report its findings to the Board; |
5. |
maintain minutes of meetings and periodically report to the Board on significant results of the Committees activities; and |
6. |
perform any other activities consistent with this Charter, the Corporations documents, and governing law, as the Committee or the Board deems necessary or appropriate. |
F. |
COMPLAINTS PROCEDURE |
Complaints regarding accounting, internal accounting controls, or auditing matters may be submitted to the Committee, attention: The Chair. Complaints may be made anonymously and, if not made anonymously, the identity of the person submitting the complaint will be kept confidential. Upon receipt of a complaint, the Chair will conduct or designate a member of the Committee to conduct an initial investigation. If the results of that initial investigation indicate there may be any merit to the complaint, the matter will be brought before the Committee for a determination of further investigation and action. Records of complaints made and the resulting action or determination with respect to the complaint shall be documented and kept in the records of the Committee for a period of three years.
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WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
MANAGEMENTS DISCUSSION AND
ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2014
The following management discussion and analysis of Western Copper and Gold Corporation (together with its subsidiaries, Western or the Company) is dated March 27, 2015, and provides an analysis of the Companys results of operations for the year ended December 31, 2014.
This discussion is intended to provide investors with a reasonable basis for assessing the financial performance of the Company as well as certain forward looking statements relating to its potential future performance. The information should be read in conjunction with Westerns audited consolidated financial statements for the year ended December 31, 2014 and the notes thereto. The Companys accounting policies are described in note 3 of the audited consolidated financial statements for the year ended December 31, 2014. All of the financial information presented herein is expressed in Canadian dollars, unless otherwise indicated.
Western is listed on the Toronto Stock Exchange (TSX) and the NYSE MKT under the symbol WRN. Additional information relating to the Company, including the Companys Annual Information Form for the year ended December 31, 2014 (AIF), is filed with Canadian regulators on SEDAR at www.sedar.com and with the United States Securities and Exchange Commission (the SEC) at www.sec.gov on Form 40-F.
The operations of the Company are speculative due to the high-risk nature of the mining industry. Western faces risks that are generally applicable to its industry and others that are specific to its operations. Certain key risks affecting the Companys current and future operations are discussed in its AIF and Form 40-F. This list is not exhaustive. Additional risks not currently known to the Company, or that the Company currently deems immaterial, may also impair the Companys operations. Such risk factors could materially affect the value of the Companys assets, and future operating results of the Company and could cause actual results to differ materially from those described in the forward looking statements contained in this management discussion and analysis. Reference is made to the discussion of forward-looking statements at the end of this document.
DESCRIPTION OF BUSINESS
Western Copper and Gold Corporation and its wholly-owned subsidiary, Casino Mining Corp., are focused on advancing the Casino project (Casino or Casino Project) towards production. The Casino Project is located in Yukon, Canada and hosts one of the largest undeveloped copper-gold deposits in Canada. The Company completed a feasibility study on the Casino Project in January 2013 and completed the first step in the permitting process by submitting the Casino Project proposal to the Yukon Environmental and Socio-economic Assessment Board in January 2014. Western is advancing the project through the permitting process, and continues to progress certain key aspects of the projects development.
FINANCIAL POSITION
As at December 31, 2014, Western had working capital of $15.7 million, including $16.6 million in cash and short-term investments. To date, the Company has not received any revenue from mining operations and is considered to be in the exploration stage. Although Western believes that its current working capital balance will be sufficient to complete the permitting of the Casino Project, it will require additional funding for on-going operations and the development of the Casino mine. While it has been successful raising required funds in the past, there can be no assurance that it will be able to do so in the future.
- 1 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
CORPORATE ACTIVITIES
Effective October 22, 2014, Mr. Archie Lang was appointed to the Board of Directors and Robert Byford resigned as a director of the Company.
Mr. Lang was an elected member of the Yukon Legislative Assembly for two terms between 2002 and 2011. During his tenure as an elected official, he served as Minister of Energy, Mines, and Resources, Minister of Highways and Public Works, and Minister of Community Services.
Mr. Langs work in those ministries provided him with in-depth knowledge of key issues surrounding the development of natural resources in the north. During his tenure, Archie also assisted in managing the devolution of responsibility for these portfolios from Canada to Yukon and, in conjunction with the Federal Government and First Nations, implemented the Yukon Environmental and Socio-economic Assessment Act.
CASINO PROJECT
PERMITTING
Western submitted the Casino Project Proposal (the Project Proposal) to the Yukon Environmental and Socio-economic Assessment Board (YESAB) for assessment in January 2014. The assessment process in the Yukon involves several steps after the submission of the Project Proposal concluding with the issuance of a Decision Document by YESAB. Once a project receives the Decision Document, the next step is obtaining a Quartz Mining License (QML). The QML would allow the Company to begin construction of the mine. The final significant permit following the issue of the QML is the Yukon Water License.
On November 28, 2014, the Casino Project re-entered the YESAB process after a six-month hold period to allow for additional consultation with Little Salmon/Carmacks First Nation (LSCFN). On January 23, 2015, YESAB provided its Adequacy Review Report to the Company. This report outlines the YESABs requests for further information before the Casino Project may proceed to the public screening phase of assessment. Western submitted additional information on March 16, 2015. YESAB will review the additional information and either declare the application adequate to advance to the screening phase or request further information.
COMMUNITY RELATIONS
The Casino Project is located primarily within Selkirk First Nations Traditional Territory. On March 12, 2014, Western and Selkirk First Nation announced that they had entered into an agreement relating to the Casino Project. The agreement commits the parties to work cooperatively to review, evaluate and discuss the Casino Project, and lays the foundation for establishing future agreements.
On November 18, 2014, Western and LSCFN signed a Consultation and Technical Cooperation Protocol and a Negotiation Protocol. The protocols commit the parties to work cooperatively to review, evaluate and discuss the Casino Project, and lay the foundation for establishing future agreements.
The Company continues to work with First Nations and local communities to ensure that the various stakeholder concerns are addressed.
- 2 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
DEVELOPMENT
The Company continues to develop certain key engineering aspects of the project, particularly in regards to power supply, liquefied natural gas supply chain, and project execution planning.
In May 2014, the Company signed a memorandum of understanding with Siemens Canada Ltd. (Siemens). Under the terms of this agreement, the two parties will work together to develop a concept for integrated electrical mining equipment from Siemens for the Casino Project, including the power plant and the mill drives.
In August 2014, Western announced that it has awarded the engineering, procurement and construction management (EPCM) contract for Casino to M3 Engineering & Technology Corporation of Tucson, Arizona (M3). M3 is a logical choice because it is very familiar with Casino, having worked on the project from an early stage preparing two pre-feasibility studies as well as the feasibility study issued in early 2013.
In September 2014, the Company announced that it signed a letter of intent (LOI) with M3 committing to develop an agreement for M3 to operate and maintain the Casino mine. The LOI outlines the general terms and scope by which M3 will operate the heap leach and concentrator processing facilities at Casino and provide procurement and contract management services to the Company. Under the direction of Western, M3 will manage all aspects of day-to-day operations at the mine site and the port of export, including mining, contract maintenance of mining equipment, power plant operations and maintenance, concentrate storage and load-out, and other support services contracts.
This arrangement is expected to enhance the Companys ability to finance, build and operate the Casino mine and is expected to provide substantial benefits while having minimal impact on project economics.
TIMELINES
In 2015, the Company will continue to work with governments, local communities, and stakeholders to advance the Casino Project through the permitting process. Based on Casinos permitting progress to date, the Company now estimates that key permits will be received near the end of 2016, with construction starting as soon as practicable thereafter.
The above-noted timelines represent managements best estimate of Casinos development schedule, however permitting timelines in North America are uncertain. Delays outside of the Companys control may occur. Construction of the Casino Project is also subject to project financing.
- 3 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
PROJECT HIGHLIGHTS
On January 7, 2013, the Company released the results of the feasibility study on its Casino Project and subsequently filed the technical report titled Casino Project, Form 43-101F1 Technical Report Feasibility Study, Yukon, Canada Revision 1 dated January 25, 2013 (the Feasibility Study) on SEDAR on February 12, 2013. The Feasibility Study was prepared for the Company by Conrad Huss, P.E., Thomas Drielick, P.E., Jeff Austin, P.Eng., Gary Giroux, P.Eng., Scott Casselman, P.Geo., Graham Greenaway, P.Eng., Mike Hester, F Aus IMM and Jesse Duke, P.Geo., each a Qualified Person for the purposes of Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101). The following summary is qualified in its entirety by reference to the full text of the Feasibility Study, which is available under the Companys profile on SEDAR.
The Feasibility Study establishes the Casino Project as a robust copper-gold project with positive economics at conservative commodity prices. Globally over the past few years, very few projects of the size of Casino have been engineered to a feasibility study level and maintained attractive economics.
Reserve
The Feasibility Study estimates a proven and probable mill ore reserve of 965 million tonnes and a proven and probable heap leach ore reserve of 157 million tonnes. Without taking into account mining and metallurgical recovery, the proven and probable reserve contains 4.5 billion pounds of copper, 8.9 million ounces of gold, 483 million pounds of molybdenum, and 65 million ounces of silver.
The proven and probable reserve is as follows:
Proven & Probable |
Tonnes
(millions) |
Copper (%) |
Gold (g/t) |
Moly (%) |
Silver (g/t) |
Mill Ore Reserve | |||||
Proven Mineral Reserve | 91.6 | 0.336 | 0.437 | 0.0275 | 2.23 |
Probable Mineral Reserve | 873.6 | 0.190 | 0.219 | 0.0222 | 1.68 |
Total Proven & Probable (Mill) | 965.2 | 0.204 | 0.240 | 0.0227 | 1.74 |
Heap Leach Reserve | |||||
Proven Mineral Reserve | 31.8 | 0.051 | 0.480 | n/a | 2.79 |
Probable Mineral Reserve | 125.7 | 0.032 | 0.244 | n/a | 2.06 |
Total Proven & Probable (Heap) | 157.5 | 0.036 | 0.292 | n/a | 2.21 |
Economics
The commodity prices used as the base case in the Feasibility Study (Base Case) show strong returns, including an after-tax net present value of $1.83 billion using an 8% discount rate, a 20.1% internal rate of return and a pay-back period of 3 years.
- 4 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
The Company has calculated how the Casino Project returns are affected by changes in commodity prices. Based on the analysis below, the Casino Project is expected to provide positive returns in a conservative commodity price environment. All projected economic results below are on an after-tax basis and assume that the project is completely financed using equity.
Feasibility Study | Current | ||
Base Case | Prices1 | ||
Copper Price | US$/lb | 3.00 | 2.60 |
Gold Price | US$/oz | 1,400 | 1,200 |
Molybdenum Price | US$/lb | 14 | 9 |
Silver Price | US$/oz | 25 | 16.5 |
Exchange Rate | C$: 1 US$ | 0.95 | 0.80 |
Net Present Value, After-tax | 8% | 1,830 | 1,700 |
Internal Rate of Return, After-tax | % | 20.1 | 19.5 |
Payback Period | Years | 3.0 | 3.0 |
Net Cash Flow (Y1-Y4) | C$ M/year | 682 | 670 |
Net Cash Flow (Life of Mine) | C$ M/year | 400 | 380 |
Note 1 | The above information is derived from adjusting the Feasibility Study financial model (Table 22-5) for the above noted commodity prices only. |
Higher grade ore fed to the concentrator during the first four years of the concentrator operation, combined with a low strip ratio in these years, result in higher yearly cash flows during this period. These strong cash flows in the early years of the project contribute significantly to the project's financial performance and short pay-back period.
Years 1-4 | Life of Mine | ||
22 years | |||
Ore Grade1 | Cu Eq % | 0.70% | 0.50% |
Copper Production | (M lb/year) | 245 | 171 |
Gold Production | (k oz/year) | 399 | 266 |
Silver Production | (k oz/year) | 1,777 | 1,425 |
Molybdenum Production | (M lb/year) | 15.3 | 15.5 |
Strip Ratio | 0.49 | 0.59 | |
Net Smelter Return2 | ($/t milled) | 31.59 | 22.59 |
Operating Costs | ($/t milled) | 8.52 | 8.52 |
Note 1 | Copper Equivalent (Cu Eq) grade has been calculated using the following formula: Cu Eq % = (Cu %) + (Au g/t x 28.13/44.1) + (Mo % x 248.06/44.1) + (Ag g/t x 0.36/44.1) and the following commodity prices: US$2.00/lb copper, US$875.00/oz gold, US$11.25/oz silver, and US$11.25/lb molybdenum. The calculation assumes 100% metal recovery. |
Note 2 | Assumes Base Case commodity prices. |
- 5 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
Operating Costs
The Company anticipates that the Casino Project will have a by-product cash cost of negative $0.81 per pound of copper produced owing to economies of scale from the large operations, the low strip ratio, and the significant amount of revenue from by-product credits. Should the Casino Project be able to meet these goals, the project will be an industry-leading project on a copper cash cost basis.
US$ per pound | |
of copper1 | |
Total Cash Operating Costs2 | 2.95 |
By-product Revenue (from Gold, Silver, Molybdenum sales) | (3.76) |
Total Cash Operating Costs (Credits), net of By-product Revenue | (0.81) |
Note 1 | The above information is derived from the Feasibility Study financial model (Table 22-5), using Base Case commodity prices. |
Note 2 | Total Cash Operating Costs include mine site operating costs, such as mining, processing, administration, treatment and refining charges, and transportation costs, but are exclusive of royalties, reclamation, capital and development costs, and taxes. |
Capital Costs
Total initial capital investment in the project is estimated to be $2.46 billion, which represents the total direct and indirect cost for the complete development of the Casino Project, including associated infrastructure and power plant. Sustaining capital for the project is estimated at $362 million.
CAPITAL COST | $ millions |
Mine Costs (Direct and Indirect) | 1,862 |
Infrastructure | 332 |
Contingency | 218 |
Owner's Costs | 44 |
TOTAL CAPITAL COST | 2,456 |
Casino is a large project that will require significant capital; however, estimated capital costs are in the lower half of comparable projects under development on a capital cost per pound of copper equivalent basis.
ROYALTIES AND PRODUCTION PAYMENTS
All claims comprising the Casino Project are subject to a 2.75% net smelter returns royalty (the NSR Royalty) on the future sale of any metals and minerals derived therefrom. Western has the option to repurchase 0.75% of the NSR Royalty (resulting in a rate of 2%) for US$59 million if the amount is paid on or before December 31, 2017.
As part of a separate agreement, Western is required to make a payment of $1 million upon making a production decision on the Casino Project.
- 6 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
SELECTED ANNUAL FINANCIAL INFORMATION
The following annual information has been extracted from the Companys audited annual consolidated financial statements.
As at and for the year ended | 31-Dec-14 | 31-Dec-13 | 31-Dec-12 | ||||||
$ | $ | $ | |||||||
Loss and comprehensive loss | 1,911,974 | 1,365,516 | 3,913,276 | ||||||
Loss per share basic and diluted | 0.02 | 0.01 | 0.04 | ||||||
Exploration and evaluation assets | 32,545,517 | 27,034,538 | 17,706,346 | ||||||
Cash, cash equivalents, and short-term investments | 16,573,387 | 23,207,467 | 33,517,542 | ||||||
Total assets | 49,496,903 | 50,949,704 | 51,634,275 |
Items that resulted in significant differences in the annual figures presented above are explained in the following narrative.
Loss and comprehensive loss
For the year ended December 31, 2014 the Company reported a loss and comprehensive loss of $1.9 million. The loss and comprehensive loss was higher in 2014 than in 2013 largely because the Company recognized a smaller foreign exchange gain during the year ended December 31, 2014 as compared to 2013.
The loss and comprehensive loss for the year ended December 31, 2013 was lower than in 2012 largely because the Company recognized a foreign exchange gain of $1.35 million in 2013 and share-based payments were $1.3 million less than in 2012.
Exploration and evaluation assets
During the year ended December 31, 2014, the Company continued to advance the Casino Project. Costs incurred by the Company are capitalized, thus increasing the carrying value of exploration and evaluation assets.
Cash, cash equivalents, and short-term investments
Cash and cash equivalents decreased in 2013 and 2014 because the Company continued to incur expenditures to advance its Casino Project.
- 7 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
SELECTED QUARTERLY FINANCIAL INFORMATION
The following quarterly information has been extracted from the Companys unaudited condensed interim consolidated financial statements.
As at and for the quarter ended | 31-Dec-14 | 30-Sep-14 | 30-Jun-14 | 31-Mar-14 | ||||||||
$ | $ | $ | $ | |||||||||
Loss and comprehensive loss | 481,651 | 219,637 | 758,169 | 452,517 | ||||||||
Loss per share basic and diluted | 0.01 | - | 0.01 | - | ||||||||
Cash and short-term investments | 16,573,387 | 18,791,338 | 20,274,820 | 21,439,870 | ||||||||
Exploration and evaluation assets | 32,545,517 | 30,746,696 | 29,038,352 | 27,639,939 | ||||||||
Total assets | 49,496,903 | 49,842,328 | 49,624,152 | 49,702,630 |
As at and for the quarter ended | 31-Dec-13 | 30-Sep-13 | 30-Jun-13 | 31-Mar-13 | ||||||||
$ | $ | $ | $ | |||||||||
Loss and comprehensive loss | 470,337 | 639,139 | 117,180 | 138,860 | ||||||||
Loss per share basic and diluted | 0.01 | 0.01 | - | - | ||||||||
Cash and short-term investments | 23,207,467 | 26,520,786 | 29,831,659 | 32,488,827 | ||||||||
Exploration and evaluation assets | 27,034,538 | 25,078,886 | 21,939,518 | 18,973,282 | ||||||||
Total assets | 50,949,704 | 51,966,739 | 52,126,881 | 51,723,268 |
Items that resulted in significant differences in the quarterly figures presented above are explained in the following narrative.
Loss and comprehensive loss
The scale and nature of the Companys corporate and administrative activity have remained relatively consistent over the periods presented above, but a number of items have led to significant fluctuations in quarterly losses. The most significant items include foreign exchange gains and losses related to US denominated currency and the timing and valuation of stock option grants.
Exploration and evaluation assets
Expenditures incurred by the Company relating to its mineral properties are capitalized. As a result, the carrying value of exploration and evaluation assets generally increases from period to period.
Cash, cash equivalents, and short-term investments
For the most part, cash is used to fund ongoing operations that increase the carrying value of the Companys exploration and evaluation assets. Unless there is a significant financing transaction, total cash, cash equivalents and short-term investments is expected to decrease from one period to the next.
- 8 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
RESULTS OF OPERATIONS
Three Months Ended | Year Ended | |||||||||||
December 31, | December 31, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
$ | $ | $ | $ | |||||||||
Filing and regulatory fees | 4,012 | 4,095 | 155,522 | 164,673 | ||||||||
Office and administration | 78,732 | 72,271 | 273,507 | 258,806 | ||||||||
Professional fees | 40,748 | 25,094 | 156,688 | 154,988 | ||||||||
Rent and utilities | 55,608 | 79,819 | 222,519 | 204,500 | ||||||||
Share-based payments | 58,499 | 107,387 | 304,109 | 652,436 | ||||||||
Shareholder communication and travel | 123,191 | 177,591 | 499,186 | 572,635 | ||||||||
Wages and benefits | 286,760 | 255,890 | 924,778 | 948,788 | ||||||||
CORPORATE EXPENSES | 647,550 | 722,147 | 2,536,309 | 2,956,826 | ||||||||
OTHER ITEMS | ||||||||||||
Foreign exchange loss (gain) | (107,485) | (181,622) | (388,045) | (1,352,437) | ||||||||
Interest income | (58,414) | (70,188) | (236,290) | (238,873) | ||||||||
LOSS AND COMPREHENSIVE LOSS | 481,651 | 470,337 | 1,911,974 | 1,365,516 |
THREE MONTHS ENDED DECEMBER 31, 2014
Western incurred a loss of $482,000 ($0.01 per common share) for the three months ended December 31, 2014 compared to a loss of $470,000 ($0.01 per common share) over the same period in 2013. The scale and nature of the Companys administrative activity have remained generally consistent throughout these periods, but a few items have led to significant differences in the comparative loss figures.
The Company held a significant amount of US dollar denominated cash and cash equivalents throughout the year ended December 31, 2013. Foreign exchange fluctuations have decreased in 2014, partly because the Company has significantly reduced its US dollar holdings and partly because of less volatile movements between the two currencies.
YEAR ENDED DECEMBER 31, 2014
The Company incurred a loss of $1.91 million ($0.02 per common share) for the year ended December 31, 2014 compared to a loss of $1.37 million ($0.01 per common share) during the year ended December 31, 2013. The difference in the comparative loss figures was largely driven by the fluctuations in the exchange rate between the Canadian and US dollar discussed above, the valuation of previous stock option grants, and lower shareholder communication and travel expenses.
Share-based payments during the year ended December 31, 2014 were $348,000 less than those recorded in 2013. The Companys relatively high share price in 2011 led to much higher values being assigned to stock options granted in that year. The values associated with the 2011 stock options were fully amortized by the end of 2013. As a result, the Company recorded lower share-based payment charges in the current year.
Shareholder communication and travel expenses decreased by $73,000 during the year ended December 31, 2014 compared same period in 2013. During 2013 the Company incurred additional expenses associated with promoting the positive results of the feasibility study.
- 9 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
LIQUIDITY AND CAPITAL RESOURCES
For the year ended December 31, | 2014 | 2013 | ||||
$ | $ | |||||
CASH PROVIDED BY (USED IN) | ||||||
Operating activities | (1,549,511) | (1,104,986) | ||||
Financing activities | 284,349 | 9,350 | ||||
Investing activities | 2,692,521 | (26,377,431) | ||||
CHANGE IN CASH AND EQUIVALENTS | 1,427,359 | (27,473,067) | ||||
Cash and cash equivalents beginning | 6,044,475 | 33,517,542 | ||||
CASH AND CASH EQUIVALENTS | 7,471,834 | 6,044,475 |
In addition to the $7.5 million in cash and cash equivalents, the Company held $9.1 million in short-term investments on December 31, 2014. Cash and short term investments totaled $16.6 million as at December 31, 2014 compared to $23.2 million as at December 31, 2013. The decrease is mainly a result of the Companys on-going activities to advance the Casino Project.
Westerns current working capital is expected to be sufficient to fund the Companys anticipated corporate expenses and development expenditures through the completion of permitting. The Company will have to raise significant additional capital in order to build the Casino Project.
Western is an exploration stage enterprise. As at the date of this report, the Company has not earned any production revenue. It depends heavily on its working capital balance and its ability to raise funds through capital markets to finance its operations.
The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Companys ability to continue as a going concern is substantially dependent on its ability to raise funds necessary to acquire assets, perform exploration and development activities, and conduct its corporate affairs primarily through the issuance of its common shares. There is a risk that in the future the Company may not be able to raise the capital required to fund operations.
Operating activities
The significant components of operating activities are discussed in the Results of Operations section above.
Financing activities
During the year ended December 31, 2014, the Company received $284,000 from the exercise of stock options. This compares with $9,000 received from stock option exercises during the year ended December 31, 2013.
- 10 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
Investing activities
Investing activities include both mineral property expenditures and purchases and redemptions of short-term investments. Investments with an original maturity of greater than three months, even if they are cashable without penalty before that time, are considered short-term investments for accounting purposes. Purchases and redemptions of short-term investments are mainly driven by cash requirements and available interest rates.
During the year ended December 31, 2014, Western redeemed $8.0 million in short-term investments, but spent just $5.3 million on exploration and evaluation expenditures. During the year ended December 31, 2013, Western invested $17 million of the proceeds from the sale of the NSR Royalty into short-term investments and expended $9.4 million on mineral property activities.
The majority of the mineral property expenditures in both periods relates to engineering and permitting work on the Casino Project. A summary of recent activities relating to the Casino Project is available under the Casino Project section at the beginning of this report.
OUTSTANDING SHARE DATA
As at the date of this report, the Company had 94,194,936 common shares outstanding. The Company also has 6,499,001 stock options outstanding with exercises prices ranging from $0.60 to $2.84.
CONTRACTUAL OBLIGATIONS
The Company leases office space in Vancouver, British Columbia. The future minimum lease payments by calendar year are approximately as follows:
Year | $ | ||
2015 | 222,000 | ||
2016 | 112,000 | ||
Thereafter | - | ||
TOTAL | 334,000 |
The Company is required to use the proceeds received from the sale of the NSR Royalty completed in December 2012 for furthering the development of the Casino Project and for general working capital purposes; provided that the general working capital purposes of Western do not include the acquisition and development of any mineral properties unrelated to the Casino Project.
The Company has no off-balance sheet arrangements, no capital lease agreements and no long term obligations other than those described above, and throughout this document, or in the description of exploration and evaluation assets contained in the notes to the consolidated financial statements.
- 11 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
RELATED PARTY TRANSACTIONS
Director and officer remuneration
The Companys related parties also include its directors and officers, who are the key management of the Company. The remuneration of directors and officers during the periods presented was follows:
Three Months Ended | Year Ended | |||||||||||
December 31, | December 31, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
$ | $ | $ | $ | |||||||||
Salaries and director fees | 288,941 | 281,400 | 931,388 | 902,941 | ||||||||
Share-based payments | 50,754 | 96,332 | 265,178 | 564,289 | ||||||||
339,695 | 377,732 | 1,196,566 | 1,467,230 |
Share-based payments represent the fair value of stock options previously granted to directors and officers that was recognized during the years presented above.
Other
From October 1, 2011 to March 31, 2013, administration, accounting and other office services were provided by Ravenwolf Resource Group Ltd. (Ravenwolf) on a cost-recovery basis. Ravenwolf was a private company owned equally by Western, NorthIsle Copper and Gold Inc. (NorthIsle), and Copper North Mining Corp. (Copper North). Effective April 1, 2013, NorthIsle and Copper North transferred their respective Ravenwolf shares to Western and, as a result, Ravenwolf became a wholly-owned subsidiary of Western. Before becoming a Western subsidiary, Ravenwolf charged the Company $372,684 for its services for the three month period ending March 31, 2013.
SIGNIFICANT ACCOUNTING ESTIMATES
Use of estimates
The preparation of financial statements in conformity with International Financial Reporting Standards (IFRS) requires management to make judgments, estimates, and assumptions that affect the application of policies and reported amounts of assets and liabilities and disclosures of contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Significant accounts that require estimates as the basis for determining the stated amounts include share-based payments and income and mining taxes. Differences may be material.
Exploration and evaluation assets
The carrying amount of the Companys exploration and evaluation assets represents costs net of write-downs and recoveries to date and does not necessarily reflect present or future values. Recovery of capitalized costs is dependent on successful development of economic mining operations or the disposition of the related mineral properties.
- 12 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
The Companys asset are reviewed for indication of impairment at each balance sheet date. If indication of impairment exists, the assets recoverable amount is estimated. If the assets carrying amount exceeds its recoverable amount then an impairment loss is recognized in the statement of loss.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company has adopted the following standards effective for January 1, 2014. The adoption of these standards has not had a significant impact on the Companys financial statements.
IFRIC 21 - Levies sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to pay a levy and when should a liability be recognized.
A number of new standards, amendments, and interpretations are effective for annual periods beginning on or after January 1, 2015 and have not been applied in preparing these consolidated financial statements. The Company is in the process of determining the impact that these changes will have on its financial statements.
IFRS 9 - Financial instruments addresses the classification, measurement and recognition of financial assets and financial liabilities. The IASB has previously issued versions of IFRS 9 that introduced new classification and measurement requirements (in 2009 and 2010) and a new hedge accounting model (in 2013). The July 2014 publication of IFRS 9 is the completed version of the Standard, replacing earlier versions of IFRS 9 and superseding the guidance relating to the classification and measurement of financial instruments in IAS 39 - Financial Instruments: Recognition and Measurement.
IFRS 9 requires financial assets to be classified into three measurement categories on initial recognition: those measured at fair value through profit and loss, those measured at fair value through other comprehensive income and those measured at amortized cost. Investments in equity instruments are required to be measured by default at fair value through profit or loss. However, there is an irrevocable option to present fair value changes in other comprehensive income. Measurement and classification of financial assets is dependent on the entitys business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change relating to an entitys own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.
The completed version of IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.
- 13 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
In May 2014, the IASB and the Financial Accounting Standards Board (FASB) completed their joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for IFRS and United States Generally Accepted Accounting Principles (US GAAP). As a result of the joint project, the IASB issued IFRS 15 - Revenue from Contracts with Customers to replace IAS 18 - Revenue and IAS 11 - Construction Contracts, and the related interpretations on revenue recognition.
The new revenue standard introduces a single, principles based, five-step model for the recognition of revenue when control of a good or service is transferred to the customer. The five steps are: identify the contract(s) with the customer, identify the performance obligations in the contract, determine transaction price, allocate the transaction price and recognize revenue when the performance obligation is satisfied. IFRS 15 also requires enhanced disclosures about revenue to help investors better understand the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers and improves the comparability of revenue from contracts with customers.
IFRS 15 will be effective for annual periods beginning on or after January 1, 2017, with early adoption permitted.
MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for designing, establishing, and maintaining a system of internal control over financial reporting (ICFR) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in Canada.
Because of its inherent limitations, ICFR may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Managements assessment of the effectiveness of the Companys ICFR as of December 31, 2013 reported that such controls were ineffective as a result of a material design weakness caused by a lack of adequate segregation of duties in the financial close process. The Chief Financial Officer was responsible for preparing, authorizing, and reviewing information that was key to the preparation of financial reports. He was also responsible for preparing and reviewing the resulting financial reports. During 2014, management made material changes to the Companys ICFR, specifically addressing the material weakness disclosed in the prior year, including:
| Changes to roles and responsibilities of finance personnel involved in the financial close process based on an evaluation of their current qualifications and experience; and |
| Implementation of new control procedures surrounding the preparation, review and authorization of financial reports within the financial close process. |
Management performed an in-depth review and assessment of the segregation of duties of key process owners involved in the financial close process, including the identification of compensating controls, and believes that the material changes implemented during 2014 have remediated the material design weakness disclosed by the Company as of December 31, 2013.
The Chief Executive Officer and the Chief Financial Officer assessed the effectiveness of the Companys ICFR as at December 31, 2014. In making this assessment, the Companys management used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its 2013 Internal Control-Integrated Framework. Based on its assessment, management has concluded that, as at December 31, 2014, the Companys internal control over financial reporting was effective.
- 14 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
DISCLOSURE CONTROLS AND PROCEDURES
Management is responsible for designing, establishing, and maintaining a system of disclosure controls and procedures. Disclosure controls and procedures are designed to provide reasonable assurance that material information relating to the Company is made known to management, particularly during the period in which the annual filings are being prepared and that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation.
The Chief Executive Officer and the Chief Financial Officer evaluated the effectiveness of the Companys disclosure controls and procedures as of December 31, 2014 and have concluded that the Companys disclosure controls and procedures were effective as at December 31, 2014.
FINANCIAL INSTRUMENT RISK
The Board of Directors has overall responsibility for the establishment and oversight of the Companys risk management framework. The Company has exposure to liquidity, credit, and currency risks from the use of financial instruments. Financial instruments consist of cash and cash equivalents, short-term investments, certain other assets, and accounts payable and accrued liabilities.
Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its financial obligations as they come due. The Company uses cash forecasts to ensure as far as possible that there is sufficient cash on hand to meet short-term business requirements. Cash is invested in highly liquid investments which are available to discharge obligations when they come due. The Company does not maintain a line of credit.
Credit risk
Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents and short-term investments. These financial instruments are at risk to the extent that the institutions issuing or holding them cannot redeem amounts when they are due or requested. To limit its credit risk, the Company uses a restrictive investment policy. It deposits cash and cash equivalents in Canadian chartered banks and purchases short-term investments that are guaranteed by Canadian governments or by Canadian chartered banks. The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents Westerns maximum exposure to credit risk.
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company typically raises funds in Canadian dollars. The majority of the Companys expenditures are incurred in Canadian dollars, with a smaller portion incurred in US dollars. To limit its exposure to currency risk, the Company aims to maintain funds in the currency that matches that of the costs incurred, and therefore maintains a US dollar cash balance.
As at December 31, 2014, a 1% change in the exchange rate between the Canadian and US dollar would have resulted in an unrealized gain or loss of approximately $34,000 (December 31, 2013 - $58,000).
- 15 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
FORWARD-LOOKING STATEMENTS
This management discussion and analysis ("MD&A") contains certain forward-looking statements concerning anticipated developments in Westerns operations in future periods. Statements that are not historical fact are "forward-looking statements" as that term is defined in the United States Private Securities Litigation Reform Act of 1995 and "forward looking information" as that term is defined in National Instrument 51-102 (NI 51-102) of the Canadian Securities Administrators (collectively, "forward-looking statements"). Certain forward looking information should also be considered future-oriented financial information (FOFI) as that term is defined in NI 51-102. The purpose of disclosing FOFI is to provide a general overview of managements expectations regarding the anticipated results of operations and capital expenditures and readers are cautioned that FOFI may not be appropriate for other purposes. Forward-looking statements are frequently, but not always, identified by words such as expects, anticipates, believes, intends, estimates, potential, possible and similar expressions, or statements that events, conditions or results will, may, could or should occur or be achieved. These forward-looking statements are set forth, among other places, under the heading Casino Project and elsewhere in the MD&A and may include, but are not limited to, statements regarding perceived merit of properties; mineral reserve and resource estimates; capital expenditures; feasibility study results (including projected economic returns, operating costs, and capital costs in connection with the Casino Project); exploration results at the Companys property; budgets; work programs; permitting or other timelines; strategic plans; market price of precious and base metals; or other statements that are not statement of fact. The material factors or assumptions used to develop forward-looking statements include prevailing and projected market prices and foreign exchange rates, exploitation and exploration estimates, continued availability of capital and financing, availability of equipment and personnel required for permitting, construction and operations, the Company not experiencing unforeseen delays, unexpected geological or other effects, equipment failures, permitting delays, and general economic, market or business conditions and as more specifically disclosed throughout this document, and in the AIF and Form 40-F.
Forward-looking statements are statements about the future and are inherently uncertain, and actual results, performance or achievements of Western and its subsidiaries may differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements due to a variety of risks, uncertainties and other factors. Such risks and other factors include, among others, risks involved in fluctuations in gold, copper and other commodity prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; changes in project parameters as plans continue to be refined; risks related to cooperation of government agencies and First Nations in the exploration and development of the property and the issuance of required permits; risks related to the need to obtain additional financing to develop the property and uncertainty as to the availability and terms of future financing; the possibility of delay in exploration or development programs or in construction projects and uncertainty of meeting anticipated program milestones; uncertainty as to timely availability of permits and other governmental approvals; and other risks and uncertainties disclosed in Westerns AIF and Form 40-F, and other information released by Western and filed with the applicable regulatory agencies.
Westerns forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and Western does not assume, and expressly disclaims, any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as otherwise required by applicable securities legislation. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.
- 16 - |
WESTERN COPPER AND GOLD CORPORATION | MANAGEMENT DISCUSSION AND ANALYSIS |
Year Ended December 31, 2014 | |
(Expressed in Canadian dollars, unless otherwise indicated) |
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING RESOURCE AND RESERVE ESTIMATES
The MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada as of the date of this MD&A, which differ in certain material respects from the disclosure requirements of United States securities laws. The terms mineral reserve, proven mineral reserve and probable mineral reserve are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) and the Canadian Institute of Mining, Metallurgy and Petroleum (the CIM) - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. The definitions of these terms differ from the definitions of such terms for purposes of the disclosure requirements of the SEC and contained in Industry Guide 7 of the SEC. Under Industry Guide 7 standards, a final or bankable feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms mineral resource, measured mineral resource, indicated mineral resource and inferred mineral resource are defined in NI 43-101 and required by NI 43-101 to be used for disclosure of mineral resources. These terms, however, are not defined terms under Industry Guide 7 and are not permitted to be used in reports and registration statements of United States companies filed with the SEC. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. Inferred mineral resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of contained ounces in a resource is permitted disclosure under Canadian regulations. In contrast, the SEC only permits U.S. companies to report mineralization that does not constitute reserves by SEC standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained and incorporated by reference into this MD&A that describes the Companys mineral deposits may not be comparable to similar information made public by issuers subject to the SECs reporting and disclosure requirements applicable to domestic United States issuers.
- 17 - |
Western Copper and Gold Corporation
(An exploration
stage company)
Consolidated Financial Statements
For the years
ended December 31, 2014 and 2013
(Expressed in Canadian dollars)
Managements Responsibility for Financial Reporting
March 27, 2015
The accompanying consolidated financial statements of Western Copper and Gold Corporation (the Company) have been prepared by management in accordance with International Financial Reporting Standards and contain estimates based on managements judgment.
Management maintains an appropriate system of internal control to provide reasonable assurance that assets are safeguarded, transactions are properly authorized and recorded, and proper records are maintained. Further information on the Companys internal control over financial reporting is available in managements report on internal control, which follows.
The Audit Committee of the Board of Directors has met with the Companys independent auditors to review the scope and results of the annual audit and to review the consolidated financial statements and related financial reporting matters prior to submitting the consolidated financial statements to the Board of Directors for approval.
The Companys independent auditors, PricewaterhouseCoopers LLP, have audited the Companys consolidated financial statements on behalf of the shareholders and their report follows.
Julien François (signed) | Dale Corman (signed) | ||
Julien François | Dale Corman | ||
Chief Financial Officer | Chief Executive Officer |
- 2 - |
Managements Report on Internal Control over Financial Reporting
March 27, 2015
Western Copper and Gold Corporations (the Company) management is responsible for establishing and maintaining adequate internal control over financial reporting (ICFR). The Securities and Exchange Act of 1934, in Rule 13a-15(f) and 15d-15(f) thereunder, defines this as a process designed by, or under the supervision of, the Companys principal executive and principal financial officers and effected by the Companys Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
| Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions of the Company; |
| Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of Company; and |
| Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Companys assets that may have a material effect on the consolidated financial statements. |
Because of its inherent limitations, ICFR may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Managements assessment of the effectiveness of the Companys ICFR as of December 31, 2013 reported that such controls were ineffective as a result of a material design weakness caused by a lack of adequate segregation of duties in the financial close process. The Chief Financial Officer was responsible for preparing, authorizing, and reviewing information that was key to the preparation of financial reports. He was also responsible for preparing and reviewing the resulting financial reports. During 2014, management made material changes to the Companys ICFR, specifically addressing the material weakness disclosed in the prior year, including:
| Changes to roles and responsibilities of finance personnel involved in the financial close process based on an evaluation of their current qualifications and experience; and |
| Implementation of new control procedures surrounding the preparation, review and authorization of financial reports within the financial close process. |
Management performed an in-depth review and assessment of the segregation of duties of key process owners involved in the financial close process, including the identification of compensating controls, and believes that the material changes implemented during 2014 have remediated the material design weakness disclosed by the Company as of December 31, 2013.
Management assessed the effectiveness of the Companys ICFR as at December 31, 2014. In making this assessment, the Companys management used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its 2013 Internal Control-Integrated Framework. Based on its assessment, management has concluded that, as at December 31, 2014, the Companys ICFR was effective.
Julien François (signed) | Dale Corman (signed) | ||
Julien François | Dale Corman | ||
Chief Financial Officer | Chief Executive Officer |
- 3 - |
March 27, 2015
To the Shareholders of Western Copper and Gold Corporation
We have audited the accompanying financial statements of Western Copper and Gold Corporation, which comprise the consolidated balance sheets as at December 31, 2014 and December 31, 2013 and the consolidated statements of loss and comprehensive loss, cash flows, and changes in shareholders equity for the years then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.
Managements responsibility for the financial statements
Management is responsible for the preparation and fair presentation of
these financial statements in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board, and for
such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors responsibility
Our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements
present fairly, in all material respects, the financial position of Western
Copper and Gold Corporation as at December 31, 2014 and December 31, 2013 and
its financial performance and its cash flows for the years then ended in
accordance with International Financial Reporting Standards, as issued by the
International Accounting Standards Board.
PricewaterhouseCoopers LLP (signed)
Chartered Accountants
PricewaterhouseCoopers LLP
PricewaterhouseCoopers
Place, 250 Howe Street, Suite 700, Vancouver, British Columbia, Canada V6C
3S7
T: +1 604 806 7000, F: +1 604 806 7806, www.pwc.com/ca
PwC refers to PricewaterhouseCoopers LLP, an Ontario limited
liability partnership.
- 4 - |
Western Copper and Gold Corporation |
Consolidated Financial Statements |
(Expressed in Canadian dollars) |
CONSOLIDATED BALANCE SHEETS
December 31, 2014 | December 31, 2013 | ||||||
$ | $ | ||||||
ASSETS | Note | ||||||
Cash and cash equivalents | 7,471,834 | 6,044,475 | |||||
Short-term investments | 4 | 9,101,553 | 17,162,992 | ||||
Other assets | 377,999 | 707,699 | |||||
CURRENT ASSETS | 16,951,386 | 23,915,166 | |||||
Exploration and evaluation assets | 5 | 32,545,517 | 27,034,538 | ||||
ASSETS | 49,496,903 | 50,949,704 | |||||
LIABILITIES | |||||||
Accounts payable and accrued liabilities | 1,237,771 | 1,488,060 | |||||
LIABILITIES | 1,237,771 | 1,488,060 | |||||
SHAREHOLDERS EQUITY | |||||||
Share capital | 6 | 105,113,340 | 104,620,174 | ||||
Contributed surplus | 32,510,184 | 32,293,888 | |||||
Deficit | (89,364,392) | (87,452,418) | |||||
SHAREHOLDERS EQUITY | 48,259,132 | 49,461,644 | |||||
LIABILITIES AND SHAREHOLDERS EQUITY | 49,496,903 | 50,949,704 | |||||
Commitments | 9 |
Approved by the Board of Directors | ||||
Robert J. Gayton (signed) | Director | Klaus Zeitler (signed) | Director |
The accompanying notes are an integral part of these financial statements | - 5 - |
Western Copper and Gold Corporation |
Consolidated Financial Statements |
(Expressed in Canadian dollars) |
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
For the year ended December 31, | Note | 2014 | 2013 | ||||
$ | $ | ||||||
Filing and regulatory fees | 155,522 | 164,673 | |||||
Office and administration | 273,507 | 258,806 | |||||
Professional fees | 156,688 | 154,988 | |||||
Rent and utilities | 222,519 | 204,500 | |||||
Share-based payments | 10a | 304,109 | 652,436 | ||||
Shareholder communication and travel | 499,186 | 572,635 | |||||
Wages and benefits | 10a | 924,778 | 948,788 | ||||
CORPORATE EXPENSES | 2,536,309 | 2,956,826 | |||||
OTHER ITEMS | |||||||
Foreign exchange gain | (388,045) | (1,352,437) | |||||
Interest income | (236,290) | (238,873) | |||||
LOSS AND COMPREHENSIVE LOSS | 1,911,974 | 1,365,516 | |||||
Basic and diluted loss per share | 0.02 | 0.01 | |||||
Weighted average number of common shares outstanding | 93,993,748 | 93,721,753 |
The accompanying notes are an integral part of these financial statements | - 6 - |
Western Copper and Gold Corporation |
Consolidated Financial Statements |
(Expressed in Canadian dollars) |
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31, | 2014 | 2013 | |||||
$ | $ | ||||||
Cash flows provided by (used in) | Note | ||||||
OPERATING ACTIVITIES | |||||||
Loss and comprehensive loss | (1,911,974) | (1,365,516) | |||||
ITEMS NOT AFFECTING CASH | |||||||
Share-based payments | 304,109 | 652,436 | |||||
Change in non-cash working capital items | 58,354 | (391,906) | |||||
OPERATING ACTIVITIES | (1,549,511) | (1,104,986) | |||||
FINANCING ACTIVITIES | |||||||
Exercise of stock options | 7 | 284,349 | 9,350 | ||||
FINANCING ACTIVITIES | 284,349 | 9,350 | |||||
INVESTING ACTIVITIES | |||||||
Redemption (purchase) of short-term investments | 8,000,000 | (17,000,000) | |||||
Mineral property expenditures | (5,307,479) | (9,377,431) | |||||
INVESTING ACTIVITIES | 2,692,521 | (26,377,431) | |||||
CHANGE IN CASH AND CASH EQUIVALENTS | 1,427,359 | (27,473,067) | |||||
Cash and cash equivalents Beginning | 6,044,475 | 33,517,542 | |||||
CASH AND CASH EQUIVALENTS - ENDING | 7,471,834 | 6,044,475 |
The accompanying notes are an integral part of these financial statements | - 7 - |
Western Copper and Gold Corporation |
Consolidated Financial Statements |
(Expressed in Canadian dollars) |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
Number of | Share | Contributed | Deficit | Shareholders | |||||||||||
Shares | Capital | Surplus | Equity | ||||||||||||
$ | $ | $ | $ | ||||||||||||
DECEMBER 31, 2012 | 93,782,503 | 104,603,488 | 31,494,020 | (86,086,902) | 50,010,606 | ||||||||||
Cancellation and return to treasury (note 6b) | (115,566) | - | - | - | - | ||||||||||
Exercise of stock options | 17,000 | 9,350 | - | - | 9,350 | ||||||||||
Transfer of stock option value | - | 7,336 | (7,336) | - | - | ||||||||||
Share-based payments | - | - | 807,204 | - | 807,204 | ||||||||||
Loss and comprehensive loss | - | - | - | (1,365,516) | (1,365,516) | ||||||||||
DECEMBER 31, 2013 | 93,683,937 | 104,620,174 | 32,293,888 | (87,452,418) | 49,461,644 | ||||||||||
Exercise of stock options | 510,999 | 284,349 | - | - | 284,349 | ||||||||||
Transfer of stock option value | - | 208,817 | (208,817) | - | - | ||||||||||
Share-based payments | - | - | 425,113 | - | 425,113 | ||||||||||
Loss and comprehensive loss | - | - | - | (1,911,974) | (1,911,974) | ||||||||||
DECEMBER 31, 2014 | 94,194,936 | 105,113,340 | 32,510,184 | (89,364,392) | 48,259,132 |
The accompanying notes are an integral part of these financial statements | - 8 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
1. |
NATURE OF OPERATIONS |
Western Copper and Gold Corporation (Western or the Company) is an exploration stage company that is directly engaged in exploration and development of the Casino mineral property located in Yukon, Canada.
The Company is incorporated in British Columbia, Canada. Its head office is located at 1800 - 570 Granville Street, Vancouver, British Columbia.
The Company will have to raise additional funds to complete the development of its mineral property. While it has been successful in doing so in the past, there can be no assurance that it will be able to do so in the future.
2. |
BASIS OF PRESENTATION |
a. |
Statement of compliance |
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The financial statements are prepared under the historical cost convention.
These financial statements were approved for issue by the Companys board of directors on March 27, 2015.
b. |
Accounting estimates and judgments |
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates, and assumptions that affect the application of policies and reported amounts of assets and liabilities and disclosures of contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Differences may be material.
Judgment is required in assessing whether certain factors would be considered an indicator of impairment. We consider both internal and external information to determine whether there is an indicator of impairment present and accordingly, whether impairment testing is required. Where an impairment test is required, calculating the estimated recoverable amount of the cash generating units for non-current asset impairment tests requires management to make estimates and assumptions with respect to estimated recoverable reserves or resources, estimated future commodity prices, expected future operating and capital costs, and discount rates. Changes in any of the assumptions or estimates used in determining the recoverable amount could impact the impairment analysis.
- 9 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
3. |
ACCOUNTING POLICIES |
a. |
Summary of significant accounting policies |
The Companys principal accounting policies are outlined below:
(i) |
Basis of consolidation |
The Company consolidates an entity when it has power over that entity, is exposed, or has rights, to variable returns from its involvement with that entity and has the ability to affect those returns through its power over that entity. The financial statements of other entities (e.g. subsidiaries) are included in the consolidated financial statements from the date that control commences until the date that control ceases. All significant intercompany transactions and balances have been eliminated.
The consolidated financial statements of the Company include its wholly-owned subsidiaries: Casino Mining Corp., Ravenwolf Resource Group Ltd., and Minera Costa de Plata SA de CV.
(ii) |
Presentation currency |
The Companys presentation currency is the Canadian dollar ($). The functional currency of Western and its significant subsidiaries is the Canadian dollar.
(iii) |
Foreign currency translation |
In preparing the financial statements of the individual entities, transactions in currencies other than the entitys functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary assets and liabilities are translated using the period end foreign exchange rate. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All gains and losses on translation of these foreign currency transactions are included in the statement of loss.
(iv) |
Share-based payments |
The Company grants stock options to buy common shares of the Company to directors, officers, employees and consultants. The fair value of stock options granted by the Company is treated as compensation costs in accordance with IFRS 2 - Share-based Payments. The fair value of such awards is calculated using the Black-Scholes option pricing model. These costs are charged to the statement of loss or, if appropriate, are capitalized to exploration and evaluation assets over the stock option vesting period with an offsetting entry to contributed surplus. The Companys allocation of share-based payments is consistent with its treatment of other types of compensation for each recipient.
If the stock options are exercised, the value attributable to the stock options is transferred to share capital.
- 10 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
(v) |
Income taxes |
Income tax expense consists of current and deferred tax expense. Income tax expense is recognized in the statement of loss.
Current tax expense is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to the previous year.
Deferred taxes are recorded using the liability method. Under the liability method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases (i.e. timing differences). Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of loss in the period that the substantive enactment occurs.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.
(vi) |
Loss per share |
Basic loss per share is computed by dividing the net loss available to common shareholders by the weighted average number of shares outstanding during the reporting period. Diluted loss per share is computed in the same way as basic loss per share except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of all stock options and warrants, if dilutive.
(vii) |
Long-lived assets |
1. |
Exploration and evaluation assets |
Direct costs related to the acquisition and exploration of mineral properties held or controlled by the Company are capitalized on an individual property basis until the property is put into production, sold, abandoned, or determined to be impaired. Administration costs and general exploration costs are expensed as incurred. When a property is placed into commercial production, deferred costs will be depleted using the units-of-production method.
The Company classifies its mineral properties as exploration and evaluation assets until technical feasibility and commercial viability of extracting a mineral resource are demonstrable. At this point, the exploration and evaluation assets are transferred to property and equipment. The establishment of technical feasibility and commercial viability of a mineral property is assessed based on a combination of factors, such as the extent of established mineral reserves, the results of feasibility and technical evaluations, and the status of mining leases or permits.
- 11 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
Proceeds received from the sale of royalties, as a result of tax credits, or as part of government assistance programs are recognized as a reduction in the carrying value of the related asset when the money is more likely than not to be received. If the applicable property has been written-off, the amount received is recorded as a credit in the statement of loss in the period in which the payment is more likely than not to be received.
Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Companys title. Such properties may be subject to prior agreements or transfers, or title may be affected by undetected defects.
2. |
Impairment |
The Companys assets are reviewed for indication of impairment at each balance sheet date. If any such indication exists, an estimate of the recoverable amount is undertaken, being the higher of an assets fair value less costs of disposal (FVLCD) and value in use (VIU). If the assets carrying amount exceeds its recoverable amount then an impairment loss is recognized in the statement of loss.
FVLCD is determined as the amount that would be obtained from the sale of the asset in an arms length transaction between knowledgeable and willing parties. Fair value of mineral assets is generally determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects.
VIU is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and from its ultimate disposal.
Impairment is normally assessed at the level of cash-generating units, which are identified as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets.
3. |
Reversal of impairment |
An impairment loss is reversed if there is an indication that there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of amortization, if no impairment loss had been recognized.
- 12 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
(viii) |
Cash and cash equivalents |
Cash and cash equivalents consist of cash on hand, deposits in banks and highly liquid investments with an original maturity of three months or less.
(ix) |
Short-term investments |
Short-term investments are investments which are transitional or current in nature, with an original maturity date greater than three months, but no more than one year from the date of acquisition.
(x) |
Financial instruments |
1. |
Loans and receivables |
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.
Loans and receivables are initially recognized at the transaction value and subsequently carried at amortized cost less impairment losses using the effective interest rate method. Interest income is recognized by applying the effective interest rate.
The Company has classified cash and cash equivalents, short-term investments, and other assets as Loans and receivables.
2. |
Other financial liabilities |
Other financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost using the effective interest rate method.
The Company has classified accounts payable and accrued liabilities as other financial liabilities.
(xi) |
Provisions |
Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
- 13 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
b. |
Recent accounting pronouncements |
The Company has adopted the following standards effective for January 1, 2014. The adoption of these standards has not had a significant impact on the Companys financial statements.
(i) |
IFRIC 21 - Levies sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to pay a levy and when should a liability be recognized. |
A number of new standards, amendments, and interpretations are effective for annual periods beginning on or after January 1, 2015 and have not been applied in preparing these consolidated financial statements. The Company is in the process of determining the impact that these changes will have on its financial statements.
(i) |
IFRS 9 - Financial instruments addresses the classification, measurement and recognition of financial assets and financial liabilities. The IASB has previously issued versions of IFRS 9 that introduced new classification and measurement requirements (in 2009 and 2010) and a new hedge accounting model (in 2013). The July 2014 publication of IFRS 9 is the completed version of the Standard, replacing earlier versions of IFRS 9 and superseding the guidance relating to the classification and measurement of financial instruments in IAS 39 - Financial Instruments: Recognition and Measurement. |
IFRS 9 requires financial assets to be classified into three measurement categories on initial recognition: those measured at fair value through profit and loss, those measured at fair value through other comprehensive income and those measured at amortized cost. Investments in equity instruments are required to be measured by default at fair value through profit or loss. However, there is an irrevocable option to present fair value changes in other comprehensive income. Measurement and classification of financial assets is dependent on the entitys business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change relating to an entitys own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.
The completed version of IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.
- 14 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
(ii) |
In May 2014, the IASB and the Financial Accounting Standards Board (FASB) completed their joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for IFRS and United States Generally Accepted Accounting Principles (US GAAP). As a result of the joint project, the IASB issued IFRS 15 - Revenue from Contracts with Customers to replace IAS 18 - Revenue and IAS 11 - Construction Contracts, and the related interpretations on revenue recognition. |
The new revenue standard introduces a single, principles based, five-step model for the recognition of revenue when control of a good or service is transferred to the customer. The five steps are: identify the contract(s) with the customer, identify the performance obligations in the contract, determine transaction price, allocate the transaction price and recognize revenue when the performance obligation is satisfied. IFRS 15 also requires enhanced disclosures about revenue to help investors better understand the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers and improves the comparability of revenue from contracts with customers.
IFRS 15 will be effective for annual periods beginning on or after January 1, 2017, with early adoption permitted.
4. |
SHORT-TERM INVESTMENTS |
As at December 31, | 2014 | 2013 | |||||
$ | $ | ||||||
Guaranteed Investment Certificates | 9,000,000 | 17,000,000 | |||||
Accrued interest | 101,553 | 162,992 | |||||
9,101,553 | 17,162,992 |
5. |
EXPLORATION AND EVALUATION ASSETS |
a. |
Casino (100% - Yukon, Canada) |
The Casino porphyry copper-gold-molybdenum deposit is located in Yukon, Canada.
All claims comprising the Casino Project are subject to a 2.75% net smelter returns royalty (the NSR Royalty) on the future sale of any metals and minerals derived therefrom. Western has the option to repurchase 0.75% of the NSR Royalty (resulting in a rate of 2%) for US$59 million if the amount is paid on or before December 31, 2017.
As part of a separate agreement, Western is required to make a payment of $1 million upon making a production decision on the Casino Project.
- 15 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
b. |
Exploration and evaluation expenditures |
$ | ||||
DECEMBER 31, 2012 | 17,706,346 | |||
Claims maintenance | 13,800 | |||
Engineering studies | 1,338,667 | |||
Exploration & camp support | 564,619 | |||
Permitting | 6,829,111 | |||
Salary & wages | 427,227 | |||
Share-based payments | 154,768 | |||
DECEMBER 31, 2013 | 27,034,538 | |||
Claims maintenance | 3,390 | |||
Engineering | 456,759 | |||
Permitting | 4,136,478 | |||
Salary & wages | 793,348 | |||
Share-based payments | 121,004 | |||
DECEMBER 31, 2014 | 32,545,517 |
6. |
SHARE CAPITAL |
a. |
Authorized share capital |
Unlimited common shares without par
value
Unlimited number of preferred shares without par value
b. |
Share cancellation |
Pursuant to the 2006 plan of arrangement involving Glamis Gold Ltd., Western Silver Corp., and Western Copper Corp. (now Western Copper and Gold Corp.), shareholders of Western Silver Corp. were required to exchange their common shares in Western Silver Corp. for common shares of Western within six years of the plan of arrangement. The 115,566 common shares not exchanged in accordance with the plan of arrangement were cancelled and returned to treasury on May 14, 2013.
- 16 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
7. |
STOCK OPTIONS |
Based on the stock option plan approved by the Companys shareholders at the annual general meeting held on June 21, 2012, the Company may issue stock options for the purchase of up to 10% of issued capital. The exercise price of the stock options must be greater than, or equal to, the market value of the Companys common shares on the last trading day immediately preceding the date of grant. Stock options vest over a two year period from the date of grant unless otherwise determined by the directors. The maximum stock option term is 10 years. At December 31, 2014, the Company could issue an additional 3,020,492 stock options under the terms of the plan.
A summary of the Companys stock options outstanding and the changes for the years then ended, is presented below:
Number of | Weighted average | ||||||
Stock options | exercise price | ||||||
$ | |||||||
DECEMBER 31, 2012 | 5,273,667 | 1.50 | |||||
Granted | 1,750,000 | 0.66 | |||||
Exercised | (17,000) | 0.55 | |||||
Forfeited | (46,667) | 1.53 | |||||
Expired | (528,333) | 1.21 | |||||
DECEMBER 31, 2013 | 6,431,667 | 1.30 | |||||
Granted | 925,000 | 0.89 | |||||
Exercised | (510,999) | 0.56 | |||||
Forfeited | (346,667) | 1.36 | |||||
Expired | (100,000) | 1.85 | |||||
DECEMBER 31, 2014 | 6,399,001 | 1.29 |
Stock options outstanding are as follows:
Stock options outstanding, | Number of | Weighted average | Average | |||||||
by exercise price | Stock options | exercise price | remaining | |||||||
contractual life | ||||||||||
$ | years | |||||||||
$0.60 | 1,517,334 | 0.60 | 3.56 | |||||||
$0.79 0.96 | 3,056,667 | 0.82 | 2.68 | |||||||
$1.50 1.85 | 300,000 | 1.61 | 1.38 | |||||||
$2.84 | 1,525,000 | 2.84 | 1.54 | |||||||
DECEMBER 31, 2014 | 6,399,001 | 1.29 | 2.56 |
Of the total stock options outstanding, 4,457,327 were vested and exercisable at December 31, 2014. The weighted average exercise price of vested stock options is $1.52 and the average remaining contractual life is 1.93 years.
- 17 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
8. |
SHARE-BASED PAYMENTS |
The following is a summary of stock options granted by the Company in 2014 and 2013 and the fair value assigned to each grant. The fair value was calculated at the time of grant using the Black-Scholes option pricing model and the following inputs and assumptions:
July 17, | May 7, | December 12, | July 9, | January 15, | ||||||||||||
Inputs and assumptions | 2014 | 2014 | 2013 | 2013 | 2013 | |||||||||||
Stock options granted | 825,000 | 100,000 | 150,000 | 1,500,000 | 100,000 | |||||||||||
Exercise price | $0.88 | $0.96 | $0.60 | $0.60 | $1.59 | |||||||||||
Market price | $0.88 | $0.96 | $0.55 | $0.54 | $1.59 | |||||||||||
Expected option term (years) | 3.0 | 3.0 | 3.0 | 3.0 | 3.0 | |||||||||||
Expected stock price volatility | 69.5% | 69.5% | 71.8% | 74.5% | 73.4% | |||||||||||
Average risk-free interest rate | 1.11% | 1.17% | 1.18% | 1.26% | 1.25% | |||||||||||
Expected forfeiture rate | - | - | - | - | - | |||||||||||
Expected dividend yield | - | - | - | - | - | |||||||||||
FAIR VALUE ASSIGNED | $335,000 | $44,000 | $37,500 | $375,000 | $77,000 |
9. |
COMMITMENTS |
The Company has an agreement to lease its head office space until June 29, 2016. The total amount of payments remaining during the course of the agreement as at December 31, 2014 is $334,000. Of this amount, $222,000 is due within the next twelve months.
The Company is required to use the proceeds received from the sale of the NSR Royalty completed in December 2012 for furthering the development of the Casino Project and for general working capital purposes; provided that the general working capital purposes of Western do not include the acquisition and development of any mineral properties unrelated to the Casino Project.
Other commitments related to exploration and evaluation assets are described in note 5.
10. |
RELATED PARTY TRANSACTIONS |
a. |
Director and officer remuneration |
The Companys related parties also include its directors and officers, who are the key management of the Company. The remuneration of directors and officers was as follows:
For the year ended December 31, | 2014 | 2013 | |||||
$ | $ | ||||||
Salaries and director fees | 931,388 | 902,941 | |||||
Share-based payments | 265,178 | 564,289 | |||||
1,196,566 | 1,467,230 |
Share-based payments represent the fair value of stock options previously granted to directors and officers that was recognized during the years presented above.
- 18 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
b. |
Other |
From October 1, 2011 to March 31, 2013, administration, accounting and other office services were provided by Ravenwolf Resource Group Ltd. (Ravenwolf) on a cost-recovery basis. Ravenwolf was a private company owned equally by Western, NorthIsle Copper and Gold Inc. (NorthIsle), and Copper North Mining Corp. (Copper North). Effective April 1, 2013, NorthIsle and Copper North transferred their respective Ravenwolf shares to Western and, as a result, Ravenwolf became a wholly-owned subsidiary of Western. Before becoming a Western subsidiary, Ravenwolf charged the Company $372,684 for its services for the three month period ending March 31, 2013.
11. |
SEGMENTED INFORMATION |
a. |
Operating segment |
The Companys operations are primarily directed towards the acquisition, exploration, and future development of resource properties in Canada.
b. |
Geographic information |
All interest income is earned in Canada and all assets are held in Canada.
12. |
INCOME TAXES |
a. |
Rate reconciliation |
The income tax expense or recovery reported by the Company differs from the amounts obtained by applying statutory rates to the loss and comprehensive loss. A reconciliation of the income tax provision computed at statutory rates to the reported income tax provision is provided below:
For the year ended December 31, | 2014 | 2013 | |||||
Statutory tax rate | 26.00% | 25.75% | |||||
$ | $ | ||||||
Loss before taxes | 1,911,974 | 1,365,516 | |||||
Income tax recovery calculated at statutory rate | 497,113 | 351,620 | |||||
Non-deductible expenditures | (86,229) | (176,902) | |||||
Amounts expensed for tax purposes only | 89,227 | 128,286 | |||||
Difference in current tax rate in other jurisdictions | 567 | 749 | |||||
Effect of future changes in tax rates | - | 2,898 | |||||
Unrecognized tax benefit | (500,678) | (306,651) | |||||
INCOME TAX | - | - |
- 19 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
b. |
Unrecognized deferred income tax asset |
Future potential tax deductions that are not used to offset deferred income tax liabilities are considered to be unrecognized deferred income tax assets. The significant components of the Companys unrecognized deferred income tax asset are as follows:
As at December 31, | 2014 | 2013 | |
$ | $ | ||
Mineral property interests | 1,480,996 | 1,062,175 | |
Non-capital losses | 2,343,127 | 1,807,943 | |
Property and equipment | 179,882 | 179,882 | |
Other items | 143,155 | 232,382 | |
UNRECOGNIZED DEFERRED INCOME TAX ASSET | 4,147,160 | 3,282,382 |
The Company estimates that the realization of income tax benefits related to these deferred income tax assets is uncertain and cannot be considered to be more likely than not. Accordingly, no deferred income tax asset has been recorded.
c. |
Non-capital losses |
The Company has incurred non-capital losses that may be carried forward and used to reduce taxable income of future years. These losses will expire as follows:
Expiry Date | 2014 | 2013 | |
$ | $ | ||
2034 | 1,923,502 | - | |
2033 | 1,291,791 | 1,176,715 | |
2032 | 4,687,026 | 4,687,899 | |
2031 | 672,122 | 672,122 | |
NON-CAPITAL LOSSES | 8,574,441 | 6,536,736 |
The Company has approximately $26.2 million in Canadian exploration and development expenditures, and has cumulative eligible capital and undepreciated capital cost balances totaling $1.2 million. These amounts are available to reduce future taxable income and do not expire.
- 20 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
13. |
CAPITAL MANAGEMENT |
Western is a mineral exploration company with a primary focus of advancing its Casino Project towards production. Its principal source of funds is the issuance of common shares. The Company considers capital to be equity attributable to common shareholders, comprised of share capital, contributed surplus, and deficit. It is the Companys objective to safeguard its ability to continue as a going concern so that it can continue to explore and develop its projects.
Western manages its capital structure based on the funds available for its operations and makes adjustments for changes in economic conditions, capital markets and the risk characteristics of the underlying assets. To maintain its objectives, the Company may attempt to issue new shares, seek debt financing, acquire or dispose of assets or change the timing of its planned exploration and development projects. There is no assurance that these initiatives will be successful.
To facilitate the management of its capital, Western prepares annual expenditure budgets and updates them as necessary, depending on various factors, many of which are beyond the Companys control. The Board of Directors approves all annual budgets and subsequent updates.
The Company monitors its cash position and its short-term investments on a regular basis to determine whether sufficient funds are available to meet its short-term and long-term corporate objectives. The Company also seeks to provide liquidity and limit credit risk by acquiring investments that are guaranteed by Canadian governments or by a Canadian chartered bank and that are redeemable in portion or in full at the Companys option without penalty.
There was no change in the Companys approach to capital management during the year. Western has no debt and does not pay dividends. The Company is not subject to any externally imposed capital requirement.
- 21 - |
Western Copper and Gold Corporation |
Notes to the Consolidated Financial Statements |
For the years ended December 31, 2014 and 2013 |
(Expressed in Canadian dollars) |
14. |
FINANCIAL INSTRUMENT RISK |
The Board of Directors has overall responsibility for the establishment and oversight of the Companys risk management framework. The Company has exposure to liquidity, credit, and currency risks from the use of financial instruments. Financial instruments consist of cash and cash equivalents, short-term investments, certain other assets, and accounts payable and accrued liabilities.
a. |
Liquidity risk |
Liquidity risk is the risk that the Company will be unable to meet its financial obligations as they come due. The Company uses cash forecasts to ensure as far as possible that there is sufficient cash on hand to meet short-term business requirements. Cash is invested in highly liquid investments which are available to discharge obligations when they come due. The Company does not maintain a line of credit.
b. |
Credit risk |
Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents and short-term investments. These financial instruments are at risk to the extent that the institutions issuing or holding them cannot redeem amounts when they are due or requested. To limit its credit risk, the Company uses a restrictive investment policy. It deposits cash and cash equivalents in Canadian chartered banks and purchases short-term investments that are guaranteed by Canadian governments or by Canadian chartered banks. The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents Westerns maximum exposure to credit risk.
c. |
Currency risk |
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company typically raises funds in Canadian dollars. The majority of the Companys expenditures are incurred in Canadian dollars, with a smaller portion incurred in US dollars. To limit its exposure to currency risk, the Company aims to maintain funds in the currency that matches that of the costs incurred, and therefore maintains a US dollar cash balance.
As at December 31, 2014, a 1% change in the exchange rate between the Canadian and US dollar would have resulted in an unrealized gain or loss of approximately $34,000 (December 31, 2013 - $58,000).
- 22 - |
Exhibit 99.4
CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a),
PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Dale Corman, certify that:
1. |
I have reviewed this annual report on Form 40-F of Western Copper and Gold Corporation; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; |
4. |
The issuers other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) |
Evaluated the effectiveness of the issuers disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
d) |
Disclosed in this report any change in the issuers internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuers internal control over financial reporting; and |
5. |
The issuers other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuers auditors and the audit committee of the issuers board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuers ability to record, process, summarize and report financial information; and | |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuers internal control over financial reporting. |
Date: March 27, 2015
/s/ Dale Corman | |
Name: | Dale Corman |
Title: | Chief Executive Officer |
Exhibit 99.5
CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a),
PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Julien François, certify that:
1. |
I have reviewed this annual report on Form 40-F of Western Copper and Gold Corporation; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; |
4. |
The issuers other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) |
Evaluated the effectiveness of the issuers disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
d) |
Disclosed in this report any change in the issuers internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuers internal control over financial reporting; and |
5. |
The issuers other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuers auditors and the audit committee of the issuers board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuers ability to record, process, summarize and report financial information; and | |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuers internal control over financial reporting. |
Date: March 27, 2015
/s/ Julien François | |
Name: | Julien François |
Title: | Chief Financial Officer |
Exhibit 99.6
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Western Copper and Gold Corporation (the Company) on Form 40-F for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Dale Corman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
2. |
The information contained in the Report fairly represents, in all material respects, the financial condition and results of the operations of the Company. |
Date: March 27, 2015
/s/ Dale Corman | |
Name: | Dale Corman |
Title: | Chief Executive Officer |
Exhibit 99.7
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Western Copper and Gold Corporation (the Company) on Form 40-F for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Julien François, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
2. |
The information contained in the Report fairly represents, in all material respects, the financial condition and results of the operations of the Company. |
Date: March 27, 2015
/s/ Julien François | |
Name: | Julien François |
Title: | Chief Financial Officer |
Exhibit 99.8
CONSENT OF INDEPENDENT AUDITOR
We hereby consent to the inclusion in this Annual Report on Form 40-F for the year ended December 31, 2014 of Western Copper and Gold Corporation of our report dated March 27, 2015, relating to the consolidated financial statements, which appear in this Annual Report.
signed “PricewaterhouseCoopers LLP”
Chartered Accountants
Vancouver, Canada
March 27, 2015
Exhibit 99.9
CONSENT OF EXPERT
I hereby consent to the use and reference to my name and my report entitled Casino Project, NI 43-101F1 Technical Report Feasibility Study, Yukon Territory, Canada Revision 1 dated January 25, 2013, and the information derived therefrom, as contained in Western Copper and Gold Corporations Annual Report on Form 40-F for the year ended December 31, 2014.
March 27, 2015
/s/ Conrad E. Huss, P. E. |
Conrad E. Huss, P. E. |
Exhibit 99.10
CONSENT OF EXPERT
I hereby consent to the use and reference to my name and my report entitled Casino Project, NI 43-101F1 Technical Report Feasibility Study, Yukon Territory, Canada Revision 1 dated January 25, 2013, and the information derived therefrom, as contained in Western Copper and Gold Corporations Annual Report on Form 40-F for the year ended December 31, 2014.
March 27, 2015
/s/ Gary Giroux, P. Eng. |
Gary Giroux, P. Eng. |
Exhibit 99.11
CONSENT OF EXPERT
I hereby consent to the use and reference to my name and my report entitled Casino Project, NI 43-101F1 Technical Report Feasibility Study, Yukon Territory, Canada Revision 1 dated January 25, 2013, and the information derived therefrom, as contained in Western Copper and Gold Corporations Annual Report on Form 40-F for the year ended December 31, 2014.
March 27, 2015
/s/ Graham Greenaway, P. Eng. |
Graham Greenaway, P. Eng. |
Exhibit 99.12
CONSENT OF EXPERT
I hereby consent to the use and reference to my name and my report entitled Casino Project, NI 43-101F1 Technical Report Feasibility Study, Yukon Territory, Canada Revision 1 dated January 25, 2013, and the information derived therefrom, as contained in Western Copper and Gold Corporations Annual Report on Form 40-F for the year ended December 31, 2014.
March 27, 2015
/s/ Thomas Drielick, P.E. |
Tom Drielick, P.E. |
Exhibit 99.13
CONSENT OF EXPERT
I hereby consent to the use and reference to my name and my report entitled Casino Project, NI 43-101F1 Technical Report Feasibility Study, Yukon Territory, Canada Revision 1 dated January 25, 2013, and the information derived therefrom, as contained in Western Copper and Gold Corporations Annual Report on Form 40-F for the year ended December 31, 2014.
March 27, 2015
/s/ Jesse Duke, P.Geo. |
Jesse Duke, P.Geo. |
Exhibit 99.14
CONSENT OF EXPERT
I hereby consent to the use and reference to my name and my report entitled Casino Project, NI 43-101F1 Technical Report Feasibility Study, Yukon Territory, Canada Revision 1 dated January 25, 2013, and the information derived therefrom, as contained in Western Copper and Gold Corporations Annual Report on Form 40-F for the year ended December 31, 2014.
March 27, 2015
/s/ Michael Hester, F Aus IMM |
Michael Hester, F Aus IMM |
Exhibit 99.15
CONSENT OF EXPERT
I hereby consent to the use and reference to my name and my report entitled Casino Project, NI 43-101F1 Technical Report Feasibility Study, Yukon Territory, Canada Revision 1 dated January 25, 2013, and the information derived therefrom, as contained in Western Copper and Gold Corporations Annual Report on Form 40-F for the year ended December 31, 2014.
March 27, 2015
/s/ Scott Casselman, P.Geo. |
Scott Casselman, P.Geo. |
Exhibit 99.16
CONSENT OF EXPERT
I hereby consent to the use and reference to my name and my report entitled Casino Project, NI 43-101F1 Technical Report Feasibility Study, Yukon Territory, Canada Revision 1 dated January 25, 2013, and the information derived therefrom, as contained in Western Copper and Gold Corporations Annual Report on Form 40-F for the year ended December 31, 2014.
March 27, 2015
/s/ Jeff Austin, P.Eng. |
Jeff Austin, P.Eng. |
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